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Retirement Account Types

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.

Individual Retirement Accounts (IRAs)

IRAs icon

Take a look at the most common Individual Retirement Accounts (IRAs) below:

Roth IRA

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.

Traditional IRA

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. 

SEP IRA

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. 

SIMPLE 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.

Other Types of Retirement Savings Accounts

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401(k)

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.

Solo 401(k)

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.

403(b)

This account is a 401(k) offered by public schools and certain non-profit organizations to employees.

Open a Retirement Account Today

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.

Open an account with Synchrony Bank or call 1-844-345-5789 to learn more about our deposit products that will help you save for retirement.

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Sources:

IRS: https://www.irs.gov/uac/newsroom/irs-announces-2017-pension-plan-limitations-401k-contribution-limit-remains-unchanged-at-18000-for-2017

IRS: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits


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