Retirement Options

A Traditional IRA (Individual Retirement Account) is a tax-advantaged savings account designed to help individuals save for retirement. Contributions made to a Traditional IRA are typically tax-deductible, meaning you can reduce your taxable income in the year you make the contribution. The investments within the account grow tax-deferred, meaning you don't pay taxes on the earnings until you withdraw the money, usually in retirement. Withdrawals made after age 59½ are taxed as ordinary income, while withdrawals made before this age may be subject to both income tax and an early withdrawal penalty. Traditional IRAs are a popular choice for those looking to lower their current tax burden while building a nest egg for the future.

A Roth IRA (Individual Retirement Account) is a retirement savings account that offers tax-free growth and tax-free withdrawals in retirement. Unlike a Traditional IRA, contributions to a Roth IRA are made with after-tax dollars, meaning they do not reduce your taxable income in the year of contribution. However, the benefit comes when you withdraw the money: both contributions and earnings can be withdrawn tax-free, provided certain conditions are met, such as being at least 59½ years old and having held the account for at least five years. This makes a Roth IRA an attractive option for those who anticipate being in a higher tax bracket in retirement or who want the flexibility of tax-free income in their later years.

A 401(k) is a retirement savings plan sponsored by employers that allows employees to save and invest a portion of their paycheck before taxes are taken out. Contributions to a 401(k) plan are tax-deferred, meaning you don't pay taxes on the money until you withdraw it in retirement. Many employers offer matching contributions, which is essentially free money that helps boost your savings. The investments within the account grow tax-free until retirement, and you can choose from a range of investment options like mutual funds, stocks, and bonds. Withdrawals made after age 59½ are taxed as ordinary income, while early withdrawals may incur taxes and penalties. A 401(k) is a valuable tool for building a substantial retirement nest egg with the benefit of employer support and tax advantages.

A SEP IRA (Simplified Employee Pension Individual Retirement Account) is a retirement savings plan designed for self-employed individuals and small business owners, allowing them to make significant contributions toward their retirement. Contributions to a SEP IRA are made by the employer and are tax-deductible, reducing taxable income for the business. The funds within the account grow tax-deferred until retirement, meaning taxes are only paid upon withdrawal. SEP IRAs are known for their high contribution limits compared to traditional IRAs, allowing employers to contribute up to 25% of an employee's compensation or a maximum amount set by the IRS annually. This makes SEP IRAs an excellent option for business owners looking to provide retirement benefits for themselves and their employees while enjoying tax advantages.

A Solo 401(k), also known as an Individual 401(k) or Self-Employed 401(k), is a retirement savings plan designed for self-employed individuals and small business owners without employees, except possibly a spouse. This plan combines features of traditional 401(k) plans and offers substantial contribution limits, allowing participants to contribute both as an employer and employee. Contributions to a Solo 401(k) can be made on a pre-tax or Roth basis, depending on the plan's design, offering flexibility in tax planning. The plan allows for generous contribution amounts, with participants being able to contribute up to a certain percentage of their income as an employer contribution and also make employee deferrals, subject to IRS annual limits. Solo 401(k)s provide retirement savings advantages similar to larger employer-sponsored plans while offering sole proprietors and small business owners a powerful tool to save for retirement efficiently.