Individual Retirement Arrangements (IRA Plans)
IRA plans are one of the most commonly used savings options. They are individually established. IRAs give you significant tax breaks as you save money for your retirement. There are Traditional and Roth IRAs:
Traditional IRAs: Savings are not taxable until they are withdrawn for retirement spending.
Roth IRAs: Savings that go into the account are after-tax contributions. This means that you will not have to pay taxes at the time of savings withdrawal, as they have already been paid beforehand.
This kind of defined-contribution plan is commonly offered by employers to employees. Employees can have part of their payroll automatically withheld, which will be contributed to their 401(k) account. Employers may contribute matching amounts, up to a certain limit.
Similar to IRA plans, there are two options: tradition and Roth. Traditional 401(k) plans have savings that are taxed at the time of withdrawal, and Roth plan contributions are after-tax dollars. Solo 401(k) plans also exist for business owners and their domestic partners.
403(b) and 457(b) Plans
These plans are practically the same as 401(k) plans, but are only offered to some employees in the following work areas (availability varies among individual facilities):
403(b) Plans: Public schools, churches, and charities
457(b) Plans: Nonprofits, and state and local governments
In a pension plan, the employer is required to contribute to the employee’s retirement savings. Pensions differ from 401(k) plans in that they are defined-benefit plans. The employer has a specific amount that they are required to contribute.
The savings make up an investment pool for the employee. When the employee retires, they typically have the choice of receiving their payments periodically or in a lump sum. It is important to weigh your options carefully to choose the payment plan that fits your needs best.
Find the Plan that’s Right for You
Planning for retirement can be overwhelming, but exciting at the same time! At I & E Insurance Agency, we’ll get to know you and your retirement goals to help you build a plan that’s perfect for your needs.
Whether you know exactly what you want or don’t know where to start, we’re here for you every step of the way: Connect with us today by calling (732) 295-5584, or send us an email at firstname.lastname@example.org.