When people are planning out their futures, they want to know that they are going to be covered for life. They want to know that whatever path they decide to follow, that when the time comes they will be set to retire and live out the rest of their lives comfortably. It is important to be in a retirement plan that is best suited to the career you choose to follow. With QuestIRA you will have many different retirement plans to select from, but some of the most popular are the Traditional IRA, the Roth IRA, the SEP IRA, and the SIMPLE IRA. Below we will be covering the basics of each of these plans.
With the Traditional IRA the account growth is tax deferred, so the money put into it isn’t taxed. Instead you pay taxes on the distributions. You are able to take out distributions at any time, however, you are penalized 10% if you take out any before the age of 59 ½. This plan has many tax advantages and is especially popular for people whose employers don’t offer a retirement plan. You can find more information and look into opening a Traditional IRA here.
Roth IRAs are similar to Traditional IRAs in the sense that you contribute a certain amount each month in order to save for your retirement. However, with Roth IRAs, rather the having your contribution tax deferred, it is taxed before. When you distribute, then, it is tax free. These are popular for people who start their retirement savings at a young age because they can watch it grow over their entire lives. Also, if you plan to earn more later in life, you can pay the smaller tax now when you contribute and avoid a larger tax later when you distribute. There are income limitations to Roth IRAs, however, so this option isn’t available to everyone. You can find more information in Roth IRAs here.
The Simplified Employee Pension Plan (SEP) IRA is typically used by people who own their own small businesses. With this plan, business owners are able to contribute to their own accounts, as well as their employees accounts, in addition to what they are already contributing. To learn more about setting up an SEP IRA you can go here.
Savings Incentive Match Plan for Employees (SIMPLE) IRAs is another option for business owners. The SEP IRA and the SIMPLE IRA are very similar in that you are able to contribute to your own account as well as your employees account. However, with SIMPLE IRAs there is a larger early withdrawal penalty, and the eligibility for a SIMPLE IRA is a little bit different. To learn more about SIMPLE IRAs you can go here.
Planning for your future may seem daunting, but there are tons of options to pick from so that you can find one that is best for you. Although these are some of the more common ones, QuestIRA does have other plans to choose from if none of these fit your needs. You can find some of their other options on the QuestIRA website and choose one that is best for you.