At one time, retirement accounts were straightforward. These days, there are many retirement account options, leading to confusion and questions. Let’s review some key differences between sponsored retirement accounts and non-sponsored retirement accounts.
Sponsored Retirement Plans
Sponsored retirement plans are offered and managed by companies and organizations as a benefit to employees. Sponsored retirement plans include:
When an employee diverts some of their salary to a sponsored retirement plan, contributions are invested by the account owner through the choices made available in the plan. One benefit of many sponsored retirement plans is employer matching. Another benefit is that contributions from your salary can reduce pre-tax income. Sponsored retirement plans do, however, come with contribution limits and early withdrawal penalties.
Non-Sponsored Retirement Plans
The most common non-sponsored accounts are:
Non-sponsored retirement plans typically provide more investment options than those offered through employee-sponsored plans. You should also be aware that there are IRS-mandated contribution limits for both IRA types.
Required minimum distributions (RMD) must be taken from Traditional IRA accounts when an investor reaches 72 years. Roth IRAs don’t have RMD requirements, however, with limited exceptions, withdrawals must be taken after age 59 ½ and after a five-year holding period to avoid early withdrawal penalties.
As you begin planning for retirement, it's good to know the options available to you. Choosing the right retirement plan is important when thinking about post-employment years. We will work together and find the best option to fit your retirement needs. Call the office today.
This material was developed and prepared by a third party for use by your Registered Representative. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. The content is developed from sources believed to be providing accurate information.
For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera nor any of its representatives may give legal or tax advice.