U.S. citizens have a wide range of retirement plans to choose from depending on their needs and income level. Government employees have their own plans while those working in the private sector also have their own pension plan. The following are some of the most popular types of retirement investment plans.
Everyone knows about the 401k pension plan. It is in fact the most popular, most subscribed pension plan in the country. Its popularity is derived from the fact that the entry requirements are very simple, so any adult who has a decent job can join. The second type of pension plan is the IRA or individual retirement account. This is a variation of the 401k that makes it possible for investors to put their money in a wide range of assets, including; real estate, equities, precious metals, commodities and any other type of asset that is traded in the open market. The latest addition to the industry is the precious metal IRA. This is a variation of the IRA that makes it possible for investors to only invest in precious metals, such as gold and silver.
It is important to note that the vast majority of pension plans are tax-qualified. This means that they come with a wide range of tax benefits. For instance, contributions of up to a certain limit are tax deductible. Earnings from investments in the pension plan are also tax deferred. In some plans, taxes are paid at the source when the investor is making a contribution. This means that income tax will not be paid when the pensioner is making withdrawals. If income tax is not paid at the source when making contributions, the tax will be paid when the pension account matures and the pensioner starts making withdrawals. When choosing a pension plan, the most important factors of consideration include the income requirements, types of investments a person prefers and the available investment period.