IRA Retirement PlanIRA Plan
When it comes to retirement planning, you can easily get confused by all of the retirement account options available to choose from. For example, there are 401(k) plans, traditional IRAs, SIMPLE IRAs, Roth IRAs, SEP IRAs and others. You may be developing a retirement plan today and may be wondering if the use of an IRA retirement plan is beneficial to you. With a closer look at the pros and cons of an IRA, you may learn that this is indeed a great retirement plan for most people.
It is important to realize that there are different types of IRAs with different rules and benefits in place. It is wise to educate yourself about each of the options available. For example, a traditional IRA uses pre-tax dollars as contributions. This reduces your tax liability now, and you only have to pay taxes on the money when you use retirement benefits and make a withdrawal from the account. A Roth IRA works in the opposite way. It uses after-tax money as contributions, but you won’t usually pay taxes on the withdrawals that you make. There are benefits for different individuals with these and other types of IRAs, so it is important to review the options and benefits carefully before you decide which type of account is best for you.
While a SIMPLE IRA will allow an employer-matching contribution, this type of account is generally viewed as less advantageous as a 401(k) matching program. Most experts advise people who are working on retirement planning today to focus their efforts on taking full advantage of their employer’s contributions matching program initially, and this is most commonly done with a 401(k). Typically, it is advised that any additional funds that you would like to contribute toward retirement go into a secondary retirement account after the limit for the employer-matching account has been reached. However, you should consider which of the accounts is best for you with regards to contribution limits, tax benefits and other factors.
There are many factors to consider when developing a retirement plan. Your focus today should be on deciding how much money you have available to contribute toward a retirement plan and how those funds will be allocated. Carefully review the different types of IRAs that are available to you as well as other types of retirement accounts that you may have access to in order to enjoy success from your retirement planning efforts.