What Are the Different Types of Retirement Plans?

Save

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.

IRAs

  • 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.

Deferred Annuities

  • 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.

Time Frame

  • 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 In the case of Roth accounts, direct contributions can be withdrawn at any time without penalty or tax because the money has already been taxed.

Investments

  • 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.

References

Promoted By Zergnet

Comments

You May Also Like

  • Types of Retirement Plans Offered to Individuals

    Individuals can choose from many different types of retirement plans. Retirement plans generally allow you to direct money that you have deposited...

  • 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 Retirement Investments

    There are different types of retirement accounts (pensions, IRAs, ... There are many different types of retirement plans that you can choose...

  • Types of Savings Accounts

    Choosing the right type of saving account depends on your savings goals and how readily you need your money. ... Types of...

  • 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,...

Read Article

How to Renovate a Bathroom Inexpensively

M
Is DIY in your DNA? Become part of our maker community.
Submit Your Work!