IRA, 401(k), 403(b). What does all of this gibberish mean? Preparing for retirement can be very confusing. Some retirement options are tax deductible and some grow tax-free. The number of retirement options grows all the time. What is the difference and which option is actually right for you? To save you time I have compiled a list of the different types of retirement plans and what each offers.<\/p>\n\n\n\n\n\n\n\n\n\n\n\n

\n Most Popular<\/strong><\/h3>\n<\/td>\n<\/tr>\n
401(k)\/403(b)<\/strong><\/td>\n	For many this is the easiest plan to participate in. The money is withheld during your payroll deduction and you can save up to $18,000 of your pre-tax income ($24,000 if age 50 or older). If you leave your job you are able to roll this into another 401(k) or an IRA.<\/p>\n 401(k) is traditionally offered at for-profit companies, while 403(b) is offered at non-profits and for teachers.<\/td>\n<\/tr>\n
IRA<\/strong><\/td>\n	Anybody is able to contribute up to $5,500 towards an IRA ($6,500 if you are over age 50). In an IRA the money grows tax-free, however, when you withdraw money, the tax will be applied.<\/p>\n IRA contributions are tax deductible under certain conditions:<\/p>\n Single Filer With a Retirement Plan at Work<\/strong><\/p>\n \n If your household income is $61,000 or below your contributions are fully deductible.<\/li>\n If your household income is between $61,000 and $71,000 your contributions are partially deductible.<\/li>\n If your household income is $71,000 or above your contributions are not deductible.<\/li>\n<\/ul>\n Single Filer Without a Retirement Plan at Work<\/strong><\/p>\n \n Your contributions are fully deductible regardless of your income<\/li>\n<\/ul>\n Joint Filer Where Both Individuals Have a Retirement Plan at Work<\/strong><\/p>\n \n If your household income is $98,000 or below your contributions are fully deductible.<\/li>\n If your household income is between $98,000 and $118,000 your contributions are partially deductible.<\/li>\n If your household income is $118,000 or above your contributions are not deductible.<\/li>\n<\/ul>\n Joint Filer Where Only One Individual Has a Retirement Plan at Work<\/strong><\/p>\n \n If your household income is $184,000 or below your contributions are fully deductible.<\/li>\n If your household income is between $184,000 and $194,000 your contributions are partially deductible.<\/li>\n If your household income is $194,000 or above your contributions are not deductible.<\/li>\n<\/ul>\n Joint Filer Where Neither Individual\u00a0Has a Retirement Plan at Work<\/strong><\/p>\n \n Your contributions are fully deductible regardless of your income.<\/li>\n<\/ul>\n You are able to contribute to both a 401(k) and an IRA.<\/td>\n<\/tr>\n
Roth IRA<\/strong><\/td>\n	Anybody is able to contribute up to $5,500 towards a Roth IRA ($6,500 if you are over age 50).<\/p>\n Contributions are after-tax dollars and are not tax deductible like a traditional IRA. However, the money you earn grows tax-free and you do not pay taxes to withdraw money after you reach age 59 \u00bd.<\/p>\n Additionally, unlike a traditional IRA there is not a mandatory withdrawal at age 70. Furthermore, you can withdraw your contributions (but not earnings) at any time without penalty or paying taxes.<\/p>\n To contribute to a Roth IRA your annual income must be less than $131,000 (single filer) or $193,000 (joint filers). If your income is greater than $117,000 (single filer) or $184,000 (joint filers) your allowed contribution is reduced.<\/p>\n You can contribute to both a Roth IRA and a traditional IRA but the contribution limits are applied to the total contributions.<\/td>\n<\/tr>\n
\n Least Popular<\/strong><\/h3>\n<\/td>\n<\/tr>\n
Solo 401(k)<\/strong><\/td>\n	This is an individual 401(k) designed for a sole proprietor to make contributions as both the employee and employer. Contributions can be up to $53,000 ($59,000 if over age 50)<\/td>\n<\/tr>\n
SEP IRA<\/strong><\/td>\n	SEP is a simplified employee pension and is for self-employed or small business owners. An employer can contribute up to 25% of their income or $53,000, whichever is less.<\/p>\n An SEP IRA is easier to set up than a Solo 401(k), however, if the business has employees the employer must contribute the same amount for all employees who meet certain requirements.<\/td>\n<\/tr>\n
Simple IRA<\/strong><\/td>\n	This is designed for small employers (less than 100 employees) to set up IRAs. Employers must either match employee contributions or make an unmatched contribution.<\/p>\n An employee can contribute up to $12,500 ($15,500 if over age 50)<\/td>\n<\/tr>\n
Investing<\/strong><\/td>\n	This is not a \u201creal\u201d retirement plan but rather a \u201cgo-it-alone\u201d plan. This does not have any tax benefits and is less safe than a using a \u201creal\u201d retirement plan.<\/span><\/p>\n In this plan you invest your money into stocks or commodities (gold, silver, etc.). You can either manage your own investment portfolio, if you have the knowledge, or hire a broker.<\/p>\n When you sell an investment at a profit you are required to pay capital gains tax. However, if done properly this can have tremendous rewards.<\/p>\n Investing can be very rocky, therefore, whenever someone asks me about investing, I always say never put any money into an investment that you are not willing to flush down the toilet.<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n *All information is as of\u00a02016<\/p>\n Your Financial Freedom Partner, \nJoel Parker<\/span><\/p>\n","protected":false},"excerpt":{"rendered":" IRA, 401(k), 403(b). What does all of this gibberish mean? Preparing for retirement can be very confusing. Some retirement options are tax deductible and some grow tax-free. The number of retirement options grows all the time. What is the difference and which option is actually right for you? To save you time I have compiled…<\/p>\n","protected":false},"author":3,"featured_media":5253,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30,39],"tags":[],"class_list":["post-4954","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","category-personal-finance","category-30","category-39","description-off"],"yoast_head":"\n