Every working person works hard to secure their financial future, especially for the years after retirement. However, since the job market is ever-changing and people are willing to change their jobs frequently, most of them do not want to depend solely on employer-based pension and social security benefits. So, many of them must work even after the ripe age of 65 years. For secure financial status in the post-retirement years, people have the choice to opt for the private retirement account.
Originally, in a 401k plan (or the retirement savings plan) from an employer, the employee can contribute a part of their salary to the plan before the deductibles. Until and unless any amount is withdrawn, the deductible is not applicable. However, it does not ensure a futuristic pension or payable component. Recently, the Treasury department of the US and the IRS have formulated a new rule in which the employees can invest to contribute to their own plans as soon as they are employed, and this contribution is transferable in case of job changes. So, in place of investing all their contributions to the pensions, they can use a part of it in their private retirement account to ensure a payable component for life and, at the same time, leave the other savings untouched.
The advantage of the private retirement account is that an employee can choose among the options available for the future income and if there is any untimely demise, then the remaining portion of investments is entitled to the survivors other than the spouse. This is unlike the employer-funded pension plan, where a choice must be made among taking a guaranteed income for their whole life or a lesser amount, but it will ensure the income for the employee and his spouse. However, if there is an untimely demise, the remains are not transferred to the survivors.