When it comes to investing for retirement, there are a number of different options available. One of the best ways to ensure that your money is secure and growing is to invest in an IRS-approved retirement plan — but with so many types of plans to choose from, it can be hard to know which one is right for you. To help make this decision a little easier, here is a quick guide to the most common types of IRS retirement plans.
1. Traditional IRA: This type of account allows you to contribute pre-tax income towards your retirement savings and benefit from tax deductions on some or all of your contributions. The money in this account can be invested in stocks, bonds, mutual funds, and other investments. This type of account also allows you to defer taxes until retirement, when the money can be withdrawn tax-free.
2. Roth IRA: Like a traditional IRA, this type of account allows you to contribute pre-tax income towards your retirement savings — but with some key differences. Contributions to a Roth IRA are not tax-deductible, but the money in this account can be withdrawn tax-free once you reach retirement age.
3. 401(k): This is a type of employer-sponsored retirement plan that allows employees to save for retirement on a pre-tax basis. Employers often provide an employer match as an incentive to contribute, which can help employees save even more for retirement.
These are just a few of the most popular types of IRS retirement plans. With the right plan in place, you can rest assured knowing that your financial future is secure. Talk to a professional today to find out which plan is right for you.
