SETTING YOUR PATH TOWARDS FINANCIAL SECURITY
401 (k) Retirement Plans and Individual Retirement Plans
Everyone looks forward to retirement, but not everyone looks forward to planning for it, so 401(k) and retirement plans are necessary. A strong financial plan can take the hassle out of this process and secure a balance of investment products that may yield the retirement lifestyle many people dream of. While most working Americans will receive Social Security benefits, in most cases, these will not be sufficient to provide a comfortable retirement income. Depending on personal circumstances, either a 401(k) retirement plan or an Individual Retirement Plan can help in working towards accumulating a sizeable retirement account. You probably have heard of both of these types of plans, but what do they actually entail?
401(k) Retirement Plans
A 401(k) is an employer-sponsored retirement plan. It is commonly offered to employees at large, small, or mid-size companies. 401(k) plans offer several benefits, including potential employer contributions. Enjoy tax savings by setting aside a portion of pre-tax salary in a tax-deferred investment account, which can also generate compound interest and capital appreciation. Depending on the type of plan selected, 401(k) plans can also offer yields from a variety of investment options. When you work with us, we can help you decide the amount and frequency of 401(k) contributions that fit with your current lifestyle and your future. We will ensure that contributions are within the federal limits and your employer’s requirements are met. We want to reduce your worry about saving enough for retirement while simultaneously allowing you to enjoy your life today. We are dedicated to determining what works best for you and your goals.
- Employer contributions in most cases
- Contributions taken from pre-tax salary allow for a reduced tax rate
- Tax deferral of compounding income and growth
- The opportunity to select from a variety of investment products
Individual Retirement Plans
Another option for retirement planning is to contribute to an Individual Retirement Plan (IRA). IRAs allow a variety of investment options, including variable annuities, stocks, and government securities. There are several types of IRAs, including the Traditional IRA or Roth IRA. A traditional IRA is funded through after-tax dollars and can be contributed to even if a client holds another retirement plan, such as a 401(k). A traditional IRA has several tax advantages: all income tax is deferred until money is withdrawn, and the growth of contributions and earnings is generally tax-deferred.
A Solo 401(k) is a qualified retirement plan you may not have heard of before. It is also known as a Self-Employed 401(k) and is only available for business owners that have no full-time employees other than themselves and their spouse. Business owners can enjoy the same tax benefits as a traditional 401(k) so they can save for their retirement. A unique aspect of this type of 401(k) is that while the business owner has to work full-time, he/she does not have to work full-time for their own business. People who have a side hustle in addition to their full-time job may enjoy this plan.