Do you know which type of retirement account is right for you? With so many options for saving for retirement, choosing a savings plan can be confusing.
Here is a brief outline of several different types of retirement accounts that will help you get started on your savings plan.
Take a look at the most common Individual Retirement Accounts (IRAs) below:
With a Roth IRA, your contributions are not tax-deductible, but you can make annual contributions subject to IRS limits and let your money grow tax-free. Your tax benefit generally comes when you make tax-free withdrawals after age 59 ½.
With a Traditional IRA, your contributions may be tax-deductible. Your contributions are subject to IRS limits. If you have a Traditional IRA, you will not be allowed to make regular contributions after turning 70 ½.
You can begin making withdrawals as early as 59 ½, but if you make a withdrawal before this age, you will have to pay an IRS 10% tax penalty. Withdrawals are subject to income tax.
Simplified Employee Pension (SEP) IRA plans allow small business owners or a self-employed individual to contribute a higher maximum deposit to a Traditional IRA.
Savings Incentive Match Plan for Employees (SIMPLE) IRAs allow small business owners to make matched contributions to employees' traditional IRAs.
If employees do not contribute, employers contribute a flat rate of unmatched dollars. This plan is designed for small businesses that do not offer other retirement savings plans.
This type of retirement account is set up by employers at for-profit companies. Pre-tax contributions are made by employees through payroll deduction according to IRS limits.
Employers can contribute to these plans as part of their employee compensation package. Employees can make withdrawals when they retire and must include these withdrawals as taxable income.
This type of account is for sole proprietors, who can contribute as both employers and employees. Contribution levels are similar to those for SEP IRAs.
This account is a 401(k) offered by public schools and certain non-profit organizations to employees.
When it comes time to save for retirement, Synchrony Bank can help. We have several savings account types that can help you meet your retirement goals.
Synchrony Bank does not provide tax advice so be sure to contact your tax advisor or financial consultant before opening or contributing to an IRA.
*ANNUAL PERCENTAGE YIELD (APY): All APYs are accurate as of .
APYs are subject to change at any time without notice. Offers apply to personal accounts only. Fees may reduce earnings. For Money Market and High Yield Savings Accounts, the rate may change after the account is opened. For CDs, a minimum of $2,000 is required to open a CD and must be deposited in a single transaction. A penalty may be imposed for early withdrawals. After maturity, if you choose to roll over your CD, you will earn the base rate of interest in effect at that time. The APY shown for CDs and IRA CDs is for a 60-month CD with a balance of at least $25,000. Click here for all CD rates and terms offered.