All About Types of Retirement Plans

Retirement is one of life's biggest worries and thus planning for a suitable retirement scheme plays an important role in providing a source of income in an individual's retired life. Believe or not, the retirement life of a person can span up to a third of a lifetime of an individual. You may navigate to our official website, if you want to hire wellesley irrevocable trust lawyer to handle your case.  

Thus planning properly for your retirement is like saving for a 25 year long vacation. Thus, to afford an expense of that magnitude, one has to properly start planning from an early stage of life.

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Types of retirement plans that are mainly sponsored by the employer:

1) 401(k) plans:

For company 401(k) plans, employee contributions grow tax deferred and thus there are strict penalties for early withdrawals. Usually companies offer only one of the following 401(k) plans: Safe harbour 401(k), Traditional 401(k) or Simple 401(k) plans.

Whereas some of the companies also offer a Roth 401(k) plan which allows the participants to make either an after tax or a pre-tax salary deferral contribution. 

2) Simple IRA:

It is a retirement plan i.e. mainly meant for employers who are managing a company of less than 100 employees. In this case the employee contribution is not mandatory. However, regardless of the fact that whether the employee contributes or not, the employer has to definitely contribute.

The employer has the authority to choose whether to make matching or non-elective contributions. For additional information regarding the same, you can seek the guidance of your financial councillor.