6 Types of Retirement Accounts to Know About

1. Pros of 401(k) Plans

  • Automatically contribute from your paycheck.
  • High contribution limits ($20,500 per year or $27,000 per year if you’re 50+)
  • You may get matching contributions from your employer.
  • Limited investment options that are dependent on your employer.
  • Penalty fees if you withdraw from the account before age 59 and a half.
  • You don’t get a tax break on your contributions.
  • Contribution limits are low ($6,000 per year or $7,000 per year if you’re 50+)
  • If you have qualified employees, you must contribute an equal proportion of their compensation to their own SEP IRA.
  • Like a traditional IRA, there are early-withdrawal penalties if you withdraw before age 59 and a half.
  • You get matched or guaranteed contributions
  • They’re easy to set up.
  • High contribution limits.
  • There’s a traditional and Roth option so you can pick the tax advantage that works best for you.


Yenis Bejas

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