Confused about retirement plan choices?

Here’s a quick once over of the many choices you may have.

Individual retirement plans or the IRA is the personal retirement savings account that individuals can set up on their own.  The earnings in a traditional IRA grow tax deferred until you withdraw them in retirement.

Roth IRA is similar to the traditional IRA but there are some key differences.  Contributions to a Roth are made with after-tax dollars so they are not tax deductible.  However, qualified withdrawals are tax free.

A 401K is an employer sponsored retirement plan offered by private companies.  Employees can contribute a portion of their pre-tax income and Employers often match a portion of the employee’s contributions.

403(b) and 457 Plans are similar to 401k plans but are specific to certain tax-exempt organizations, government employees and public education institutions.

Simple IRA and SEP IRA are designed for small business and the self-employed.  A Simple IRA allows both employers and employees to make contributions while a SEP IRA is funded only by the employer.

As promised, this is just a quick overview. Each of the retirement account options offer some tax advantages, and they each have their own limits and specific rules that apply.  It’s important to understand the details of each before choosing your retirement planning path.  Consider contacting a Sara-Bay Financial advisor for a more complete discussion about your retirement.


The information in this article is a compilation pulled from a variety of sources.  The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.


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