Understanding the Different Types of Retirement Plans


Saving for your retirement is a significant task. Thankfully, there are many types of retirement plans to help you reach your retirement goals. Navigate the ins and outs of these common retirement plans today. Work with a trusted advisor at Jacobs Financial Services to set a course for smart planning.

IRA vs. Roth IRA

Retirement accounts typically have tax advantages when compared with traditional savings accounts. These advantages vary, as do the rules and requirements for signing up for a plan. Two of the most common accounts are IRAs and Roth IRAs. These accounts aren’t set up by your employer but are completely managed by you as an individual.

An IRA, or Individual Retirement Account, is an account that leverages tax-deferred savings strategies. Not only do you receive an income tax deduction on your contributions, but your savings will grow tax-deferred. Choose between deductible and nondeductible contributions to determine whether your retirement withdrawals will be taxed.

Roth IRAs operate similarly, but you contribute after-tax money. While you won’t receive a tax deduction on your contributions, any growth and withdrawals in the future will be tax-free. This reduces the amount you can put into your account year after year, but it allows you to maintain a clear picture of your retirement income due to tax-free withdrawals.

SIMPLE IRA

Not all IRAs are completely individual projects. A SIMPLE IRA, which stands for Savings Incentive Match Plans for Employees, adds the benefit of employer-matched contributions. Your employer must offer this plan to use it, and it’s usually reserved for employers of small businesses. It offers some of the advantages of an employer-offered 401(k) but is more affordable for small business owners to offer to their employees. This type of plan is typically more attractive than a traditional IRA or Roth IRA because of the option for employer-matched funds.

401(k) Options A larger, more popular employer-offered account is a 401(k). At Jacobs Financial Services, we offer 401(k) retirement planning services to help you better understand and use your account. There are specific limits of pre-tax contributions you can make to your 401(k). These investments will grow tax-deferred and can be matched by your employer.

Since these types of retirement investments are through a plan offered by your employer, you’ll need to perform a 401(k) rollover if you leave your place of employment. Work with our team to navigate this process and avoid paying any additional taxes, fines, or fees on your hard-earned 401(k) savings.

Simplified Employee Pensions

These plans are designed to help a business owner or self-employed individual to save money for retirement. The plan uses tax-deferred savings that are tax-deductible at the time of contribution. The limits on these plans are typically higher than IRA contributions, so they’re a great option for small business owners looking to avoid the costs of creating a 401(k) plan.

Compare Plans with Jacobs Financial

Comparing all of these retirement savings account options can feel overwhelming. To make matters more complicated, most plans have a contribution limit. Individuals wishing to save more for retirement need to organize a number of plans to meet their retirement goals. Contact us at Jacobs Financial Services to start saving the right way. Identify your retirement goals, manage your savings accounts, and make your money work for you.

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