With so many choices for saving for retirement, it can be challenging to know which savings plan is right for you. In this article, we provide a brief outline of several different types of retirement savings account options that will help you prepare for your retirement goals.
An IRA, or Individual Retirement Account, is a tax-advantaged savings vehicle that helps account holders save for retirement. There are four main types of IRAs:
You can make post-tax dollar contributions to a Roth IRA subject to IRS limits and restrictions. The tax benefit begins when you make tax free withdrawals after age 59 ½. Any earnings on your contribution to a Roth IRA are tax-free.
Contributions are generally tax-deductible for the tax year in which you contribute subject to IRS limits and restrictions. You can withdraw from a traditional IRA as early as age 59 ½.
You must begin taking money out of your Traditional IRA at 70 ½ or you will be charged with an IRS penalty. All withdrawals are subject to income tax.
Another IRA option is a Simplified Employee Pension (SEP) IRA plan. A SEP IRA allows small business owners or self-employed individuals to contribute to a traditional IRA a higher maximum deposit than other IRA types.
Savings Incentive Match Plan for Employees (SIMPLE) IRAs offer small business owners the opportunity to match their employees’ contributions to traditional IRAs.
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.
In addition to IRAs, a 401(k) provides another retirement savings option for individuals:
A 401(k) is a savings account offered by employers at for-profit companies. Employers can contribute to their employees’ 401(k) accounts as part of their compensation package. Employees will make pre-tax contributions via payroll deductions.
Employees can make withdrawals when they retire, but these withdrawals must be included as taxable income.
A Solo 401(k) is designed for sole proprietors, who can contribute as both employers and employees. Contribution amounts are similar to those for SEP IRAs.
If you are exploring your options for a retirement savings plan, Synchrony Bank can help. We offer several retirement savings accounts that can help you meet your retirement goals.
Synchrony Bank’s IRAs feature award-winning customer service and FDIC insurance up to $250,000 per depositor for each ownership category.
*ANNUAL PERCENTAGE YIELD (APY): All APYs are accurate as of 05/25/2018.
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.