Choosing a retirement plan is extremely important and daunting. There are various types of retirement plans, each with its own advantages and disadvantages. Here are some of the ten best retirement plans one can choose.
401k plans
As one of the ten best retirement plans that one can choose, this plan involves deducting a fixed amount from an employee’s salary before taxation and employer contributions.
Roth 401k
This plan is more flexible than the traditional 401k. Taxes are cut during deductions which mean that taxes are not paid during withdrawal. One can withdraw from the fund any time after holding the account for 5 years.
IRA plans
These are individual retirement plans that allow individuals to hold investments to fund retirement. These investments are not taxed until withdrawn.
Roth IRA
This is an individual retirement plan that functions much the same way as the Roth 401k.
Thrift Savings Plan
TSPs are one of the ten best retirement plans available to Federal employees. There are both traditional and Roth versions of this plan.
Profit sharing plans
Self-employed and small business owners may find this to be the best suited of the ten best retirement plans to choose from. It allows employees and the employer to save a cut of the profit for the retirement plan.
SEP IRAs
These are retirement plans for the self-employed or small businesses. Contributions are made by the owner.
SIMPLE IRA
This is one of the ten best retirement plans for businesses with up to 100 employees. Employees and employers can make contributions.
403b plans
Also called tax-sheltered annuities, it is offered to tax exempt entities and functions like the 401k. Contributions are made from salary deductions and optional employer contributions.
457b plans
These are local or state government plans made available to tax-exempt institutions and contractors. It functions in the same way as the traditional 401k.