| Retirement Options |
 |
 |
 |
| PERSONAL FINANCE | |||||||||||||||||||||||||
| Written by Monica Sandler | |||||||||||||||||||||||||
| Wednesday, 12 December 2007 14:27 | |||||||||||||||||||||||||
IRAs are personal tax-deferred accounts for employed people. You can open an IRA almost at any bank, brokerage, and insurance company. With an IRA your savings will be invested and will grow untaxed until they are paid out of the account. Roth IRAs provide estate preservation benefits. Investing assets that you wouldn't need in your lifetime into a Roth IRA, allows you to build a healthy inheritance for your children, free of income taxes. The Revenue Act of 1978 created new retirement options for employee benefit plans. Under section 401(k) of the Internal Revenue Code, employers may offer their employees the option of taking cash payments currently or deferring the cash until retirement. Employees may also elect to defer current income to their plans on a pre-tax basis. This simply means that an employee can invest money into a plan before the money is taxed. Employees can save thousands of dollars each year by choosing this option. Profit-sharing plans, savings plans, and stock bonus plans all may include provisions for 401(k)s. These plans were created for education and non-profit employees and are very similar to 401(k). The money contributed to a 403(b) comes from pre-tax salary. The contribution is deducted from your paycheck before it is taxed. This adds to the growth power of your savings. Defined Benefit Pension Plans In a pension plan, your employer commits to paying a specific monetary benefit for life beginning at your retirement. Benefit amount depends on several factors: age, earnings, and years of service. Pension plans have an annual permitted cap, though contributions are unlimited. These are retirement plans for self-employed professionals, as well as the owners and employees of small businesses. Keogh accounts grow tax-free until they are paid out. Full-time employees are included in a Keogh plan if they have worked for the company for over three years. Annuities allow you to secure a stream of income payments in your retirement as long as you live. Like many retirement vehicles annuities offer tax deferral. They come in two types: fixed and variable. Fixed deferred annuities pay a fixed interest rate on your tax-deferred savings. Variable annuities fluctuate in value with market conditions, but offer you flexibility of investments and potential for higher growth. Income annuities are usually used by individuals, but can also suit businesses to pay pension benefits to retired employees. 
Powered by !JoomlaComment 4.0alpha3
!joomlacomment 4.0 Copyright (C) 2009 Compojoom.com . All rights reserved."
|
|||||||||||||||||||||||||
Facebook Page
TwitterAnswered questions
Ameri-Poll
