| It is important to make good choices when it | | | | |
| comes to saving for your retirement. Having a | | | | There are technically five (5) types of |
| Financial Planner or Accountant review your | | | | IRA's: Traditional IRA, Educational IRA, SEP |
| current portfolio and your goals for the | | | | IRA (simplified employee pension), Simple IRA |
| future is the first thing you should do; as | | | | and Roth IRA. |
| they can help you determine investment | | | | |
| vehicles that align with your risk tolerance | | | | A Traditional IRA grows tax-deferred, meaning |
| and savings objectives. | | | | you do not pay taxes on any of the money |
| | | | growing within your account. Because you are |
| But where do you start? Which retirement | | | | funding your IRA with money that has already |
| plans should you focus on? What are the | | | | been taxed, you will only pay taxes on your |
| differences between the various retirement | | | | investment gains as you take withdrawals. |
| plans out there? | | | | Some, who qualify, may even be able to deduct |
| | | | their IRA contributions. |
| Many Advisors would agree; that if the | | | | |
| company you work for offers a 401(k) plan, a | | | | A ROTH IRA is different from a Traditional |
| pension plan or a 403(b), you should take | | | | IRA in that your contributions grow tax-free. |
| advantage of the opportunity to enroll. | | | | Meaning, you do not have to pay tax on your |
| Typically, employers make monetary | | | | investment gains even when taking them in the |
| contributions towards these plans and the | | | | form of withdrawals. Your contributions are |
| internal fees associated with these types of | | | | also not deductible. If you choose a ROTH |
| accounts are usually lower than with | | | | IRA, you must first open a traditional IRA, |
| individual retirement plans. Because of these | | | | and then roll those monies into the ROTH |
| features, over time, it benefits you two-fold | | | | account. |
| to put your money into them. | | | | |
| | | | College professors and teachers have a |
| Though investing in an employer-sponsored | | | | special retirement plan or pension called a |
| plan has its advantages, it has some | | | | 403(b). This plan is not tied to their |
| disadvantages as well. The investment options | | | | specific employer and can move with them as |
| you have are usually very limited. And more | | | | they transfer from school to school. If |
| often than not, you are required to name a | | | | you're vested (meaning you have the right to |
| spouse or child as your beneficiary. This | | | | keep all the money in the account) and change |
| being said, it is still an excellent way to | | | | schools or even careers, the amount in your |
| save and acquire for retirement, it just | | | | 403(b) plan continues to grow tax-deferred. |
| shouldn't be your only investment vehicle. | | | | |
| | | | If your retirement plan/pension includes |
| With the current trends of changing careers | | | | stock options (ability to purchase shares of |
| every 5 to 10 years, many of us will need to | | | | company stock), or if your employer gives |
| roll our 401(k)'s long before we actually | | | | shares of stock to your plan, you can keep |
| plan to retire. Transferring or "rolling" | | | | them as the shares will be in your name. You |
| your employer-sponsored retirement plan to a | | | | can also sell the shares of stock for the |
| self-managed IRA may be the best option for | | | | going market rate. You have two choices |
| you. Keep in mind that some companies will | | | | should you decide to keep your shares of |
| automatically cash out your retirement plan | | | | stock: you can continue to use your former |
| if the balance is under a certain amount. If | | | | employer as your housing agent, or you can |
| this happens, they will be required to hold | | | | roll the stocks into an IRA that you have |
| back 20% for taxes, and you may get hit with | | | | opened with a brokerage firm. |
| a 10% penalty for withdrawing the cash before | | | | |
| 59 ½ years old. Though generally, your | | | | There are many choices and options for your |
| former employer would simply perform a direct | | | | retirement investing. In addition to the |
| transfer (called trustee-to-trustee exchange) | | | | research and articles you will read on your |
| to your IRA, incurring no penalties or tax | | | | own, it is still always prudent to sit with a |
| ramifications. | | | | Financial Planner or Accountant to thoroughly |
| | | | review and assess your current financial |
| A major benefit to IRA's (individual | | | | situation, to determine where you are now, |
| retirement account) is the tax break. | | | | and how to achieve your financial goals in |
| Contributions to an IRA reduce the income you | | | | the future. |
| need to pay taxes on at the end of the year. | | | | |
| At the same time you receive this tax break, | | | | *** This article is intended for |
| your money is also growing tax-deferred. | | | | informational purposes only, and should not |
| (Meaning you do not have to pay taxes on the | | | | replace discussing your individual needs with |
| growth as long as the money is not being | | | | your local Insurance Agent or Financial |
| withdrawn.) | | | | Representative. |