Are you confused about all the different types of retirement plans? It’s complicated! Depending on the type of retirement account you have, different rules apply
IRA, or Individual Retirement Accounts, are retirement accounts owned by an individual. There are two fundamental types of IRA’s, a traditional IRA and Roth IRA.
- Traditional IRA
- Anyone can make a contribution to a Traditional IRA.
- Contributions can be deductible depending on income limits.
- Withdrawals are taxable.
- Withdrawals must begin in the tax year you turn 70 1/2
- Roth IRA
- Must meet income limits to make contribution.
- Contributions are not deductible.
- Withdrawals are not taxable.
A SIMPLE IRA plan is a salary reduction retirement plan for certain small businesses that is established in the form of employee-owned traditional individual retirement accounts (but with a higher contribution level).