Retirement Planning



Do you need to do it? Is it important? Yes, it's important because its your future. So let me tell you how you can do it in the best possible way. Fist of all you need to check whether you are covered under any retirement plan related to your employment means what is the retirement plan your employer has offered you. Most of the retirement plans are authorized under internal revenue code such as Section 401(K) or 403(b). As on date there are many retirement plans are available. You can opt for the plan which suites your retirement planning requirements. Let's discusses the most common plans.

401k retirement plans - The 401(k) plan is a employer retirement plan under section 401(k) of the Internal revenue Code in the USA mainly by private sector companies.

A 401(k) plan allows an employee to save for retirement while deferring income taxes on the saved money and earnings until withdrawal. The employee may decide to have a section of his or her salary paid directly into his or her 401(k) account. In participant-directed plans, the employee can choose from a number of investment options, usually an assortment of mutual funds that emphasize stock, bonds and a mix of the both. Many companies' 401(k) plans also offer the option to purchase the company's stock.

403(b) retirement Plans - The 403(b) plan is a tax advantaged retirement savings plan available for public education organizations, non-profit employers and self-employed ministers in the United States. The tax treatment in this plan is similar to 401(k) plan. In simple words it can be said than an employee salary deferrals into a 403(b) plan are made before income tax is paid on it, and allowed to grow tax deferred until the money is taxed as income when taken out of the plan.

The Savings incentive match plan for employees (SIMPLE IRA) - This plan servers companies with 100 or less than 100 employees and the good this is that it also includes the self employed people for self employed retirement plans also. The plan may be structured like 401(k plan but the disadvantages is that IRA contribution limit does not apply on this plan.

Simplified employed Pension Plans (SEP-IRA) - This is for a comply with 25 or less employees. The plan may be structured like 401(k plan but the disadvantages is that IRA contribution limit does not apply on this plan. This is something we can say retirement plans for small business.
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