Choose A Pension Scheme


Choose Pension Scheme As Per Your Need

We have often been advised that we should save for our old days. Well, the advice is appropriate as well. The reason being that in your old age, you would not be able to earn as much as you do now. Your workplace would also like you to retire as you would have lost the energy to work. Moreover, you would also like to rest as you have worked quite hard now. Well, this is when pension scheme come into picture.

Different Pension Scheme You Should Consider

Choose Pension Scheme As Per Your Need
Choose A Pension Scheme

There are many different pension schemes available. The need is to identify and select the best pension scheme as per your requirement. The federal government has created many different tax beneficial retirement accounts. These include 401 (K) and individual retirement accounts as well. Let us read in detail about these pension schemes.

401 (K) Pension Scheme

As per financial experts, people, especially youngsters should invest in 401 (K) pension scheme. This option is best if the firm where you are working marches the part of your contribution. Thus, if you are working in a firm which offers a 401 (K) scheme, you should definitely save under that plan. This scheme is definitely a good start to your retirement savings.

Health Savings Account Pension Scheme

People possessing health insurance plans should save their money in a HSA or health savings account. The said account allows you to contribute upto $3500 in a year. Moreover, you can even contribute upto $7,000 for a family. once you reach the age of 65, you can withdraw this money without any tax issues. However, if by chance, you withdraw before the retirement age, you need to pay taxes. In fact, you may have to pay 20 percent penalty when you withdraw before the stipulated time.

Solo 401 (K)

Choose Pension Scheme As Per Your Need
Choose A Pension Scheme

Many people find it easy and the best place to start investing for retirement as per them is 401 (K). As per solo 401 (K) , an individual can make contributions to the funds, as both the employer and the employee. Moreover, you can make contribution upto $56,000 as said in the year 2019.

SEP IRA

SEP basically stands for simplified employee pension scheme. This is an account designed specifically for small business owners. You are eligible to contribute upto 25 percent of your earnings or $56,000 as in the year 2019, or whatever amount is less. People who are above 50 years of age can contribute an extra $3,000 in the account.

Simple IRA

This particular pension scheme allows small employers to set up their IRAs. The best part is that they require very less paperwork for the purpose. As per the scheme, the employers are supposed to make matching contributions as that of the employee or make unmatchable contributions. As per the scheme, the employee gets the option to contribute up to $13,000 as in the year 2019. Again, people who are above the age of 50 years can contribute an extra $3,000 in their account.

Conclusion

If you are still confused, you can consult a professional who can guide you further. Happy saving!

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