Private Retirement Plans

Private retirement plans can go a long way in helping you achieve your goals. Here are some of the best retirement savings plans that allow you to invest tax deferred money for your future.

Individual Retirement Plans

First up are individual plans which you can sign up for outside of your work place and direct yourself.

IRA

An IRA is an investment account which allows you to stack away up to $5,500 each year and write it off on your taxes. Many of these plans will allow you to invest the money yourself and give you plenty of investment options.

Roth IRA

A Roth IRA is similar to a traditional IRA with one big difference. You cannot write off any deposits into the plan on your taxes. However unlike other plans, it allows you to receive a tax free income when you take it out. This includes all of the interest that you make.

Both IRAs and Roth IRAs can be used alongside other employee sponsored plans such as the 401k.

Individual 401k Plan

An individual 401k plan can only be used by the self employed entrepreneurs who do not have any employees, other than a spouse. This plan allows you to invest up to $16,500 per year. In addition to that you can also invest up to 25% of your business’s revenue into the plan provided the total annual investment does exceed $49,000.

Employer Sponsored Plans

Most employers will have some sort of Define Contribution Retirement Plan which allows you to invest money into a savings plan created and managed by the employer. Here are a few Examples of retirement plans that fit into this category.

401k

The 401k is an employer sponsored plan allowing employees to contribute up to $16,500 into the plan annually before it can be taxed.

457 Account

The 457 account is similar to a 401k but it can only be used for employees of government or non-taxable corporations. There is a special type of 457 plan called the 457 (f) plan which does not set a limit on the amount of money that can be invested into the plan. In order to do this there has to be some sort of “risk or forfeiture” meaning there is a chance that you will lose the entire account.

412 (i)

The 412 (i) plan is a special retirement plan because it only allows employees to contribute money from an annuity or from both an annuity and life insurance. Regular income cannot be invested into the plan nor can the plan be funded with just life insurance.

Chart of Retirement Plans

Those are the private retirement plans, but which ones are the best saving plans for retirement? Here is a chart of retirement comparing some of their pros and cons.