It is imperative that folks know as much as possible about their retirement options. Not knowing your options can have negative consequences for your retirement income. Every day you fail to educate yourself and take action can cost you thousands upon thousands of dollars in retirement dollars. There is a lot to learn about investing for retirement. This post will give you specifics on many retirement options that are available.
Below are some retirement account options for Business, Government and Nonprofit:
1) 401K Private company employees are eligible for this retirement option. Your maximum contribution for 2016 is $18,000. Employers often offer matches that range from 1%-6%. If you are 50 or older you can catch up by contributing an extra $$6000 a year. Your usual investment choice is mutual funds.
2) 403(b) Employees at nonprofits and state and local governments are eligible for this type of investment. The maximum annual contribution is $18000 a year. Employer match is typically 3% to 5% of pay. If you are 50 or over you can contribute $6000 more each year. Invesment options for this investment type is mutual funds or annuities.
3) 457 Some government and nonprofit workers are eligible for this investment. Maximum annual contribution is $18000 a year. It is rare to get an employer match with this type of account. If you are 50 or over you can contribute $6000 more a year. You usually get a menu of mutual funds for this investment account.
4) Thrift Savings Plan – This is for federal government employees, including the military. Maximum annual contribution is $18,000. Employer match is 5% for those in the Federal Employees Retirement System. Annual catch-up if you are over 50 is $6000. Your investment choices are 10 funds, including 5 target-date funds.
Below are some retirement options for small business employers and employees:
1) SEP-IRA Small business employers and employees are eligible for this option. You can contribute 25% of your salary, up to $53,000 (same for all personnel). All employer match contributions come from the employer. There is no annual catch-up but contributions are also permitted after age 70 1/2. All funds offered where account is held.
2) Simple IRA Maximum annual contribution is $12,500. The match is 3% (or 2% employer contribution to all employees). Annual catch-up starting at age 50 is $3000: contributions are also permitted after age 70 1/2. You have a menu of mutual funds to choose from.
3) Solo 401K Sole proprietors and their spouses are eligible. Maximum annual contribution is 25% of profits plus $18,000, up to $53,000. No employer match. Starting at age 50 catch up contribution is $6000. All funds are offered where account is held.
Below are some funds for individual investors.
1) Roth IRA All earners making less than income phaseouts are eligible. The Roth IRA income phase-outs for single tax filers is $$117,000-$132,000. The Roth IRA income phase-outs for married jointly filers is $184,000-$194,000. Maximum annual contribution is $5,500. Annual catch-up starting at age 50 is $1000. All funds offered where account is held.
2) Traditional IRA All earners are eligible for this retirement account. Maximum annual contribution is $5,500. Annual catch-up starting at age 50 is $1000. Usual investment options are all funds offered where the account is held.
I hope that the above information gives you help in knowing what retirement account options are offered with your current employment situation. Remember: Nobody should care more about your money than you. Continually educate yourself about your financial opportunities.