Starting to really look into my retirement, and trying to figure out the baseline differences between these:
401(k)
Traditional IRA.
Roth IRA.
SEP IRA.
Simple IRA and Simple 401(k)
Solo 401(k)
My company provides a basic 401(k) that I never put much thought into, just set an amount monthly to contribute and that was that.
In: 15
Most companies hold periodic education sessions on your 401k. I would recommend you attend one.
In simple terms, a 401k is a retirement plan through your work. Usually they pitch in a little bit. For example they might match your contributions dollar for dollar up to a certain amount.
An IRA is a retirement plan that you create on your own. The current limit is $6000 per year that you’re allowed to put in this. It’s basically a special account that says that you don’t pay taxes on the money you put into it until you withdraw.
A Roth IRA is just like an IRA but you pay taxes now and then your investment grows tax free.
Bear in mind that these are all just vehicles for your retirement investing. You have to actually buy stocks or bonds, a 401k on its own is just a container for your investment and not an investment itself. These various plans just say that you get to have special tax bonuses if you follow some rules the government laid out.
With all of these accounts it is usually difficult to remove the money before retirement age and there are penalities if you do. This is so you will actually keep the money saved for retirement instead of just pulling it out whenever you feel like it.
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