| Retirement Accounts |
| Tool |
Where to find it |
What to look for |
Advantages |
Disadvantages |
Annual Contribution on limits |
Tax Advantages |
| 401k retirement plan |
Employer-sponsored plan for
for-profit businesses |
How much your employer matches, investments offered by plan and the historical performance of the plan. 10% penalty for withdrawal before age 59.5 |
Some employers will match up to a percentage of your salary as a benefit. Might be borrowed against for qualified expenses, such as higher education and first time home purchases if the plan allows. |
Investment choices may be limited by the brokerage insurance company offering the plan. Penalties for early withdrawal. |
$16,500 plus $5,000 catch-up for those age 50 and older. Employer match can be in addition |
Contributions can be made pre-tax and earnings grow tax-deferred, will be taxed upon withdrawal |
| 403b retirement plan (sometimes called a TSA) |
Employer-sponsored plan for non-profit businesses |
How much your employer matches, investments offered by plan and the historical performance of the plan. 10% penalty for withdrawal before age 59.5 |
Some employers will match up to a percentage of your salary as a benefit. Can be borrowed against for qualified expenses, such as higher education |
Investment choices may be limited by the brokerage or insurance company offering the plan. Penalties for early withdrawal. |
$16,500 plus $5,000 catch-up for those age 50 and older. Employer match can be in addition |
Contributions can be made pre-tax and earnings grow tax-deferred, will be taxed upon withdrawal. |
| 457 retirement plan |
Employer-sponsored plan for government employees |
Investments offered by plan and the historical performance of the plan. 10% penalty for withdrawal before age 59.5 |
Can be borrowed against for qualified expenses, such as higher education if plan allows. |
Investment choices may be limited by the brokerage or insurance company offering the plan. |
$16,500 plus $5,000 catch-up for those age 50 and older. |
Contributions can be made pre-tax and earnings grow tax deferred, will be taxed upon withdrawal. |
| SEP-IRA |
Employer-sponsored plan for small businesses |
How much does your employer contribute, investments offered by plan and the historical performance of the plan |
Owners invest in theirs and their employees account the same percentage, not to exceed 25% of compensation |
The employee cannot contribute to the account. 10% penalty for withdrawal prior to age 59.5 |
25% of compensation up to $49,000 |
Contributions are tax-deductible and earning are tax deferred, will be taxed upon withdrawal |
| Simple IRA |
Employer-sponsored plan primarily funded by employee |
How much does your employer contribute, investments offered by plan and the historical performance of the plan. 10% penalty for withdrawal before age 59.5 |
Small required match from the company |
Investment options determined by financial institution holding the IRA |
$11,500 or $14,000 for those age 50 and older, plus maximum 3% match from employer. |
Contributions are tax-deductible and earning are tax-deferred will be taxed upon withdrawal. |
| Traditional IRA |
|
The company you choose and investments they offer. 10% penalty for withdrawal before age 59.5 |
You choose where to invest, not restricted by employer |
There are income limits that affect deductibility. |
$5,000 plus $1,000 catch-up for those age 50 and older. |
Contributions are tax-deductible (with certain income limits and earnings are tax-deferred until you withdrawal the money. |
| Roth IRA |
|
The company you choose and investments they offer. |
You choose where to invest, not restricted by employer. |
There are income limits which affect one's ability to contribute to a Roth IRA |
$5,000 plus $1,000 catch-up for those age 50 and older. |
Contributions are NOT tax-deductible, but are tax-free upon withdrawal at anytime. All earnings are tax- and penalty-free after age 59.5 as long as the Roth IRA has been in existence for five+ years. |