Although you may be already complicated with a car, insurance, student loans, and any other payments, you should start weighing options for your retirement plan at an early stage. Check out the Top 3 plans and the options you should take into account!
If you are in your 20s or 30s, then you should add another point to your agenda: Retirement plan! Although you are ages from retiring, you must start planning your retirement as soon as you can.
You have a large variety of options based on the industry you work in, and you can even analyze other opportunities regardless of your career area. You just need to become familiar with the choices you have.
Take a look at this Top 3 options and choose the retirement plan that suits you best!
1. IRA Accounts
This is the most popular plan you will find and it's open to everybody, regardless of the industry you work in! In these types of accounts, you can start by making an end of the year deposit between Christmas and New Year's Eve.
You can start your account with a bank, insurance company, a stockbroker, or a mutual fund. Although the limit figure may change annually, it currently reaches $5,5000.
You can also open a ROTH IRA in addition to a traditional one! The difference is that it adds more retirement money and increases the tax breaks.
Regarding the eligibility for this kind of retirement plan, you don't have to worry about it! Anyone under 70 can open an IRA account.
Remember that no deposits can be made once you reach the age of 70, except you have a ROTH IRA!
2. 401K Accounts
In these types of accounts, you can choose between two options of 401K plans: The standard and the SIMPLE. This distinction actually is important because the employee contribution or deferral counts with different limits.
These retirement accounts provide special features like the option to catch-up in order to maintain the yearly contribution amount.
The best way to get started is to contact Human Resources. They will be able to answer all the questions regarding this plan!
The eligibility will vary according to the employer. In some cases, employees will be able to participate immediately, while others will have to wait up to a year.
The limit for the Standard account is $18,000 per year. The SIMPLE has a $12,500 annual limit.
Related to the previous plan, the Simplified Employee Pension Plan is similar to the traditional 401K. Nevertheless, in this case, the employer contributions will be deposited in an IRA.
It doesn't matter in which industry you work in or whether you are employed or self-employed to open this type of accounts.
Bear in mind that in this plan there are no salary deferrals or the option to catch-up.
The contribution limits are $53,000 or 25% of your salary.