Читать книгу More Straight Talk on Investing - John J. Brennan - Страница 43

There are numerous retirement-oriented accounts to help achieve your investing goals. Similar to college savings programs, there are pros and cons associated with the various options, along with rules that may limit their use and availability. I will cover the two mainstays—IRAs and 401(k) plans—at a high level. However, you may have other options available to you depending on your employment status. For instance, if you work for a non-profit institution, such as a hospital or university, a 403(b)(7) plan may be an option. If you are self-employed, you'll have your pick of a SEP IRA, Simple IRA, or individual 401(k) plan.

 Individual Retirement Accounts. IRAs enable you to invest on a tax-advantaged basis for retirement. With a traditional IRA, you may be able to deduct some or all of your contribution from your current income taxes depending on your income. Once you start taking withdrawals, they are taxed as regular income. Note that you'll be required to take distributions as some point in your early 70s. Roth IRA contributions are not tax deductible, but your withdrawals in retirement will be completely tax-free and you will not face required minimum distributions. Your income, however, may limit your ability to contribute to a Roth IRA.You can establish an IRA at a bank, brokerage firm, or mutual fund provider and, therefore, have many investment options from which to choose. You can contribute up to $6,000 a year ($7,000 if over 50 years of age) in 2021 to a traditional IRA, a Roth IRA, or a combination of the two. For most people, though, the Roth IRA is the better bet because of the tax-free withdrawals in retirement.

 401(k) plans. If you work for a company, it is likely that a 401(k) will be among the benefits you receive as an employee. Like an IRA, you'll be able to sock away money on a pre-tax basis, which will then grow on a tax-advantaged basis. When you start to withdraw the money in retirement, it will be taxed at your then-current rate. With a Roth 401(k), your contributions are made with after-tax dollars and your account grows tax-advantaged. When it comes time to tap your account in retirement, your withdrawals won't be taxed. You can invest up to $19,500 in a 401(k) plan in 2021. You can kick in another $6,500 if over the age of 50.If you are fortunate, your employer will offer a matching contribution up to a certain level. For instance, you might receive a full match of your contributions up to 4% of your take-home pay. A good 401(k) plan will also offer you a full menu of low-cost funds from which to assemble a portfolio.