Plans for Retirement
Retirement is often in the front of many U.S. workers minds during their later year of employment. However, the most important undertakings of retirement happen during ones first few years in the job industry. There are many options available to employees and employers alike, and to make the proper decision one must have at least a basic understanding of opportunities made accessible to them. This paper will discuss the individual retirement accounts, pensions plans and the benefits made available by social security. It will go into depth on the benefits are of a 401k plan and Roth IRA, the difference between defined benefit and defined contribution pensions, and discuss who is eligible for certain benefits afforded by social security.
Individual Retirement Plans are becoming more and more popular as companies are cutting back on pension plans for employees. There are several different types of individual retirement plans available to choose from, with each offering their own respective benefits. Some of the different retirement plans available include the following: Individual Retirement Accounts (IRAs), 401(k) plans, and Keogh plans.
Individual Retirement Accounts are retirement plans set up strictly by an individual at his/her own will. IRAs allow a person’s earnings to compound on a tax deferred basis. When looking at IRAs, there are two types, the Traditional IRA and the Roth IRA, each having their own unique features. Traditional IRAs allow the investor to make contributions on a pre tax basis, but there are limitations on this feature. For example, many public sector employees are not eligible to make fully deductible contributions. Also, if you have an employer funded retirement plan you may not be able to make fully deductible contributions if your modified adjusted gross income is over a certain number (For 2008: $53,000 for single filers/$85,000 joint filers) (source 1). In Roth IRAs, the investor contributes to the plan with income that has
Individual Retirement Plans are becoming more and more popular as companies are cutting back on pension plans for employees. There are several different types of individual retirement plans available to choose from, with each offering their own respective benefits. Some of the different retirement plans available include the following: Individual Retirement Accounts (IRAs), 401(k) plans, and Keogh plans.
Individual Retirement Accounts are retirement plans set up strictly by an individual at his/her own will. IRAs allow a person’s earnings to compound on a tax deferred basis. When looking at IRAs, there are two types, the Traditional IRA and the Roth IRA, each having their own unique features. Traditional IRAs allow the investor to make contributions on a pre tax basis, but there are limitations on this feature. For example, many public sector employees are not eligible to make fully deductible contributions. Also, if you have an employer funded retirement plan you may not be able to make fully deductible contributions if your modified adjusted gross income is over a certain number (For 2008: $53,000 for single filers/$85,000 joint filers) (source 1). In Roth IRAs, the investor contributes to the plan with income that has