Retirement Options,IRA,401k for Self Employed and Employed

Rollover 401k and 401K IRA with some retirement options is the discussion of the previous post and here we are going to continue the discussion with other possible options. Employee Stock Ownership Plans which are popular as ESOPs is one of the option for the employee working and he will be given owner ship on some stocks at regular intervals like a once in a quarter or six months and the number of shares offered depends on the position and salary in the organization.The owner can not contribute more than 25 present in one employee account under this scheme.

Defined Benefit Plans It is a plan where you are going to get a guaranty from the employer that you are going to get certain amount of money once in a year during the retirement period.This benefit depends on factors like his position and how much time the person worked for organization.The longer the time he worked for the company,better the amount you are going to get.

After deciding the amount and percentage to pay, the company shall divide the amount into parts and pay and contribute each year to reach that goal.This will compute basing on future salary raise projections and investment returns and this calculation is not very simple.To reach the goals some times companies can contribute much larger amounts per year .

Target Benefit Plans It has many similarities with defined benefit plans except from second year onwards the owner contribute a fixed amount rather than trying to reach a fixed amount by the end of targeted time.Here the problem is that the employer has no obligation to pay amount to reach the targets.The amount how much you are going to get at retirement simply depends on investments and how they are working.If they have worked well over the long time you will get better benefits and vise-verse.

Plans for Self Employed People This plans for qualified people are also called Keogh plans as it is introduced by him in the senate as the author.This are all most like previously mentioned corporate plans and only exception is you have to plan and execute them not the employer.They are having some exceptions and we will be discussing them in the future posts.

Individual retirement accounts These are called IRA's and this term is quite popular.They exists in different formats and in most common any individual can contribute who is having some income via employment and are called contributory IRA'S.Some other individual retirement accounts are used to get and receive assets from other retirement options and these are called rollover IRA'S.It is a kind of IRA where part of money is distributed from a qualified plan.

Roth IRA combine the process of regular IRA and other saving plans to get better benefits and they are like hybrid plans.

Simplified Employee Pensions are a kind of IRA's that can be started by you or your employer or even a self employee and they are a referred as SEP's.It is also useful for small business people and they are very easy to start and administrate. The contribution is from your income and you will not be taxed until you use that money and withdraw.The advantage is it has higher contribution limits and you can pay up to 25% to reach the targets by the end of the scheduled time.This plan gives a slight disadvantage to the employer as the employee can take his total money at any moment he want and it has no control or time frame and it takes the liquidity away.

Qualified plan demands assets to be kept under the trust. An exception is given to this rule through 403(a) section of tax code. Employers can invest annual amounts in the employee names in insurance companies. This makes the process easy for the companies to maintain and invest in the qualified plans.

Non qualified plans are offered by the boss to its employees basing on the performance of employees and it is the discretion of the company. This deal need not be the same for every employee. The boss identifies the people who are working hard for the company and offer them benefits like cash bonus, stock options or small amount of shares. This offer does not follow all rules of qualified plans and hence comes under non qualified plans. This are not protected from the claims of creditors like regular plans.

Corporate retirement plans are protected from creditors and they can not claim the money from this accounts under security rule 1974.This cover is not available for self employed plans.

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Setting up IRA account and start investing money in it