Planning for your retirement nearly always includes setting up an IRA, but do you know the different IRA plan types out there? Of course, most people have heard of traditional and Roth, even if they don’t know what those things mean. But you may not know about some of the additional options out there.
Traditional IRAs are one of the most common. They allow you to invest money before you pay taxes on it. These are tax-deductible accounts, and they can help you get more significant returns because you’re investing more money. When you take that money out, however, you must pay the taxes on everything.
Roth IRAs are another widespread option. These accounts allow you to invest money after you’ve paid your taxes. As a result, you don’t have to worry about your money again because it grows tax-free. In addition, all of the interest that you earn is yours from this account. You don’t pay anything on that interest or take money off it.
SEP IRAs are great for those who have a small business or are self-employed. That’s because the account is directly made for small businesses. So it’s basically like a traditional IRA, but for smaller businesses instead of larger ones or individuals who aren’t self-employed.
IRA Plan Types for Small Businesses
Simple IRAs are great for small businesses looking to offer something more closely linked to a 401(k) account. These allow the employer to put money into the account for the employee. Still, they have to ensure that if they’re putting money into their account, they are also putting it into employee accounts.
When you’re ready to start a retirement account, you’ll need to take a closer look at each of these to see which one (or ones) is the best investment option for you. If you fall into the right category to try multiple, for example, you might be able to set up more than one of the IRA plan types.
You start saving money with any of the IRA accounts, and before long, you’ll have some money put away to help you when it comes time for whatever you have planned for your future. You can even start putting money away long before planning for retirement so that you can earn even more and be better prepared.
There are several IRA plan types that you should consider before you start investing. That way, you’ll be able to stay as wild and free as possible, but you can also feel as comfortable with what’s to come later in your life. Check out Rocket Dollar to learn more about the different options and vital information about each.