IRAs were designed and intended to be for everyone in their quest to save for retirement. There are a number of forms of retirement plans that were set up so that every individual who wants to take advantage of one can do so. This is an ideal place to invest money that you have available for long term purposes, since this money is tax deferred savings for retirement. Five of the most popular types of IRAs are considered here.
401ks are among the best known of work-related retirement plans. Most companies that provide these for their employees do so to offer their employees benefits. When you enroll in one of these, you gain an effective and simple means for saving for retirement. Contributions that you determine are deducted from every paycheck. The real benefit to these kinds of accounts lies in the employer match that many employers provide. They are actually giving you free money with these matches, which can really help you to ramp up your retirement account savings. You retain control over the types of investments which you participate in, often from a list of possibilities. Joining a 401k is as simple as being invited by your company and then filling in a few simple forms. You are able to change the amount of contributions you make and the investments that you are a part of, as well as if you will keep participating.
Self-Directed IRAs come in many forms nowadays, such as a Silver IRA. They allow you to include a number of varying investments within them. Most investors are familiar with the traditional IRA investment choices like ETFs, stocks, bonds, and mutual funds. These are popular options, but they do not guarantee the greatest returns as with some of the investments that you can have in a Self-Directed IRA like real estate, precious metals, and franchises. Among the reasons to consider these IRAs are:
- Real Estate investments generally prove to be among the highest returning investments over time. To get involved in several pieces of property, you need a larger amount of money that you can tie up for a while. The IRA funds are an ideal source for this. You could buy shares in a REIT that is publically traded, but these tend to focus more on stability than really serious profits.
- Silver mining stocks generally underperform significant moves in the precious metal itself. There is no substitute for silver bars and coins that you can hold in these Self-Directed Silver IRAs.
- Private ventures and businesses can give you an opportunity to get in on a great idea while it is still in its early stages. The potential profits are much higher this way than in buying shares in microcap stocks or mutual funds that include them.
- Good franchises can offer tremendous returns that are far superior to large cap stocks or even shares in franchise companies.
These are all advantages to Self-Directed IRAs and the significant sums that you can amass within them. Coming up with enough funds which you can afford to tie up for years can be difficult otherwise. With Self-Directed IRAs, you can choose from so many different types of investments, such as silver, franchises, Real Estate, and private businesses.
Roth IRAs have some differences from traditional IRAs. On the one hand, you can have them established as annuities you can continue to make contributions for longer than the typical maximum age of 70 and 1/2 with a Roth IRA. You are not required to take out distributions with these accounts if you want to continue to hold funds in them so long as you are alive. They also permit you to get your allowed distributions without paying taxes on them when you take them, so long as they are not unqualified. Something these accounts have in common with traditional IRAs is their contribution limits remain the same for both types of retirement accounts.
An SEP IRA is a Simplified Employee Pension type. It is different from a traditional IRA because it is intended for the owners of businesses and their employees. Business owners are able to provide for both their own and their employees’ retirement needs with this ideal option. Setting them up involves making contributions for all employees who are a part of the plan. Every employee who is in the plan has to be given equal benefits.
SEPs are like other forms of traditional IRAs in important ways. Both kinds operate under the same regulations with regards to rollovers, distributions, and investments. All employees who meet a few criteria have to be included in the SEP plan. If they are at least 21 years old, have worked for the company in at least three of the past five years, and have earned at least $600 in a year, then they qualify.
457b accounts are different in that participation in them is restricted to a relatively limited group. If you are an employee of either a local or state government, or work in a not for profit group, then it may be a terrific option for you to save and invest for retirement. One of their great advantages it that you are able to contribute tax deferred amounts that vastly exceed traditional IRA limitations, with the maximum amounts of $18,000 for 2015 and 2016. This is true in both of the types of 457b plans. The more common type includes employees of local and state governments like firefighters, teachers, and police. The second type was designed for certain employees of not for profit organizations like charities, hospitals, and unions.
457b plans have some interesting features that make them advantageous for many individuals. Employees who choose to retire before 59 1/2 do not suffer 10% early withdrawal penalties. Those who have 457b plans can also have a 401k if one is offered, and they may contribute to both plans at maximum levels allowed by each. There are certain rollover abilities particular to these kinds of accounts as well. The government retirement accounts can be converted into employer-run plans or to personal IRAs.