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| when it comes to saving for your | | | | withdrawn.)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