Choosing a Retirement Account

RETIREMENT ACCOUNT TYPES AND WHICH ONE IS RIGHT FOR YOU

IF YOU ARE EMPLOYED: SMALL BUSINESSES OR LARGE CORPS:

401(K) – ER MATCHING…FREE MONEY!

EMPLOYED BY PUBLIC SCHOOLS, CHURCHES, AND CERTAIN CHARITIES:

403(b) – LOAN OPTIONS … MOST DO NOT MATCH

SELF EMPLOYED: SEP OR SIMPLE, LESS EXPENSIVE TO ADMINISTER THAN A 401(K) AND THEY BOTH INCLUDE TAX-DEFERRED SAVINGS

SEP – CONTRIBUTIONS ONLY MADE BY EMPLOYER (SELF) NO EMPLOYEE FUNDING.

ALL EMPLOYEES MUST RECEIVE THE SAME CONTRIBUTION %. BEST USED BY SOLOS OR MOM AND POP.

HIGH CONTRIBUTION LIMITS:

IN 2021, 25% OF EE COMPENSATION WITH MAX OF $58,000 

SIMPLE IRA – CONTRIBUTIONS REQUIRED TO BE MADE BY ER … EE MAY CONTRIBUTE TOO!

ER CONTRIBUTIONS RANGE BETWEEN 2-3% OF EE COMPENSATION

IN 2021, EE MAY CONTRIBUTE UP TO $13,500 AND $16,500 FOR AGE 50+

IRA OR A ROTH – MOST INDIVIDUALS CAN CONTRIBUTE TO IRA OR A ROTH. TAX-DEFERRED GROWTH, BUT LOW CONTRIBUTION LIMITS.  

2021 ANNUAL LIMIT 

$6000 OR $7000 AGE 50+

CONTRIBUTIONS AND WITHDRAWALS ARE TREATED DIFFERENTLY…IRA VS ROTH

*SPECIAL NOTE, IF PLAN PROVIDERS ALLOW… BOTH THE 401(K) AND 403(b) COULD HAVE ROTH VERSION.