The American dream is to one day retire and live on an income stream generated from a retirement savings account. Many corporations provide retirement savings plans to encourage their employees to save for this future
Types of Retirement Plans
There are several types of employer-provided retirement savings plans. The most common are 401(k) plans, 403(b) plans and pensions. All of these plans provide for the saving of pretax dollars into a tax-deferred account that is fully taxable upon receipt in retirement.
Individual Retirement Arrangements (IRAs) are also popular retirement savings vehicles. Some IRAs are owned by individuals such as Traditional IRAs and Roth IRAs, while others function similar to a 401(k). Examples of employer-provided IRAs are the SEP IRA and SIMPLE IRA.
Annuities are contracts issued by life insurance companies. Deferred annuities are purchased during one's working years and are used to save for retirement on a tax-deferred basis. Traditional advice is to make maximum contributions to employer-sponsored plans and IRAs before utilizing annuities as a savings vehicle.
All monies put into the accounts mentioned above are accessible when the investor turns 59 1/2. With the exception of Roths, a 10 percent IRS penalty is typically assessed the accounts are accessed before that age. In the case of Roth accounts, direct contributions can be withdrawn at any time without penalty or tax because the money has already been taxed.
Within any of the accounts mentioned above, investors will typically purchase a number of investments. The investments are typically in stocks, bonds, real estate, cash or commodities.
List of Retirement Plans
A multitude of different retirement plan types exist, offering consumers, business owners, and employees an opportunity to save money in a plan...
Types of Canadian Retirement Saving Plans
Canadians have several options available to them when planning their retirement, including employer-sponsored plans, government-sponsored pension plans and individual ...
Difference Between 403b & 401k Retirement Plans
Both 401k and 403b plans are employer-sponsored, tax-deferred retirement plans. Both allow employees to make tax-deductible contributions to their retirement funds ...
Types of Non-Qualified Retirement Plans
There are two different types of retirement accounts--qualified and non-qualified. ... A multitude of different retirement plan types exist, offering consumers, ...
What Is a Personal Retirement Account?
Another type of personal retirement account is the 401k plan. It is an account set up and administered by your employer; however,...