Retirement Planning--IRA and 401k

Successful retirement planning is an ongoing process-the earlier you can start, the better! Being financially fit and savvy in the long run may take some time to get started, but setting yourself for financial success is easy with the right investment plan as your foundation. An IRA or 401k can help you save for retirement and maximize the return on your contribution in just a few short years. Here are the basics about IRA and 401k plans:

IRA

An IRA is an Individual Retirement Arrangement. This is the most common type of long-term investment, and can be started at any age. You will always know how much is invested in the plan, and there will be varying fees and transactional costs associated with each type. It is not an investment account, but an arrangement of money with your bank that is taxed differently than other accounts. There are three basic types of IRA accounts:

• Deductible IRAs
• Non-deductible IRAs
• Roth IRAs

A deductible IRA account is a great way to cash in on a tax break. In this situation you'll be able to take advantage of tax-deferred profits as well. The non-deductible IRA won't let you get any tax breaks, but it's a possibility for people who are not eligible for the standard deductible IRA. A Roth IRA will enable you to leave money in the account for at least five years, and does not have the same restrictions as the deductible and non-deductible IRAs.

401K

Many people have questions about how a 401k works, and there are many reasons to get one started as soon as possible. A 401(k) is a company-sponsored plan that matches contributions to your retirement account; it's all done on a pretax basis, and many employers will match your contributions at least 50%. You can start withdrawing money from the 401k at the age of 70 ½ years of age, but in some cases will be able to start at 59 ½ years without a withdrawal penalty. Retiring rich is possible with a steady contribution plan, and you can take advantage of the following key reasons to open yours:

1. Earnings from the 401k aren't taxed immediately
2. You have the flexibility to choose what you want to contribute
3. Contributions are made before the taxes are taken out
4. Every employer can contribute to your standing 401k account-you own it!
5. You can setup regular deductions from your paycheck so you don't have to worry about it

Investing in an IRA or 401k plan is a valuable way to secure your financial future. It really is simple to retire rich with an effective strategy; get started as early as possible and cash in on all the benefits!