A comparison of two of the best retirement accounts

It is essential to invest into retirement accounts to live the golden years of your life with ease. IRA and 401k are considered to be the best retirement accounts. They comprise contributions from pre-tax dollars. You do not require paying any tax on the money which is contributed to the accounts till you start receiving a distribution. Though these are considered to be the best retirement plans, they have a high difference when it comes to the benefits.

401k is recognized to be an employer-sponsored program which comes with a wide number of matching benefits. It is easy to determine the personal value prior to signing the policy of the company. If the employer is partially contributing or matching the employee investment, it becomes the best option for making retirement funding an alluring one.

One of the benefits you can avail using the 401k is high contribution limits. In the year 2011, 401k account owners were allowed to contribute an amount of $17,000 on a yearly basis in the 401k account if they were aged 49 years or younger. However, they can contribute up to $22,500 in their account if they were aged 50 years or older. Other benefits include not paying any taxes on the contributed amount till the time of distribution. It is also possible to borrow from the 401k account in the events of financial or emergency crises.

IRA: IRA (Individual Retirement Accounts) is setup and managed by individuals. It is known to feature lower contribution limits. However, there is higher freedom when it comes to the allocation of funds. It is considered to be the best retirement accounts in order to save money for retirement. Many people who are self-employed prefer selecting this sort of retirement planning.

– Contributions to the account can be claimed as a deduction for the taxes.
– Higher flexible allocation.
– A wide array of investing options.
– Affordable and easy to start.

These are two of the best retirement accounts from which one can choose from and make an informed decision about their retirement planning.

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