A Comprehensive Comparison of Retirement Plans

How do you see your retirement from your mind’s eye? Are you living the same lifestyle during your retired life? Have you managed to get rid of all your debt? Is your passive income allowing you to cover all your daily life expenses? According to a recent retirement security study published by the National Institute, a vast majority of Americans retire with a balance of $15,000 in their account which may not even last a year. Gone are the times when social security and pension plans had you covered through the golden years. Today’s aging population must be diligent with retirement planning for a fully funded future. You have a growing list of retirement investment plans and so it is important to know which one is right for you. We’ve compared the pros and cons of different investment options to help you decide which holds the most benefits for your unique situation:

1. Table of Contents

   Self Directed IRA

 A powerful retirement savings plan that offers an ideal mix of investments.

Pros:

• Gives access to a wide variety of investment options
• Diversifies your retirement reserve to keep your savings protected from inflation, economic fluctuations and market volatility
• Investments grow tax-deferred

Cons:

• It may expose you to financial risks that may be difficult to handle if you are not an expert in the area you have invested 

2. 401(k) Plans

Employees participating in traditional 401(k) plans can make the most of an employer-match to build their nest egg but not all the plans offer the same benefits.

Pros:

• A high contribution match of up to 50%
• The flexibility to borrow funds up to 50% of the total plan value
• 401(k) contributions remain protected from creditors
• 401(k) contributions are not taxed

Cons:

• Investment options are limited
• Maintenance cost is relatively high 

3. Roth IRA

A retirement plan that allows tax reduction on limited retirement savings.

Pros:

• Withdrawals are tax-free
• There are no required minimum distributions

Cons:

• Contributions are not tax deductible 

4. 403(b) Plans

Also known as TSA (tax-sheltered annuity) plan, it allows eligible individuals to contribute to their individual accounts. It is available only to non-profit employers and public education organizations.

Pros:

• Savings grow tax-free
• You can take loans against a 403(b) plan
• Higher contribution limits

Cons:

• High administrative costs
• Investment options are very limited 

5. My Retirement Accounts

An initial retirement plan rolled out in 2014 for those who don’t have any retirement provisions.

Pros:

• Withdrawals are tax-free
• Low fees
• Zero risk

Cons:

• No employer match
• Contributions are low and not tax-deductible
• Investment control is low
• A rollover is mandatory after the balance exceeds $50,000 or becomes 30 year old

Here are few solid reasons to why a Self-Directed IRA is your best option: 

1. Full Control over Financial Decisions

With an IRA, you have the freedom to manage your assets and investments with a checking account that remains linked to your retirement reserve. This convenience is not available in traditional investment plans.

2. Investment Flexibility

A self-directed IRA allows you to diversify your investments beyond the market. You can invest in precious metals, foreign currency, real estate, private equity, bullion, mortgage notes and much more to keep your retirement protected from market fluctuations and live a comfortable life even as the cost of living continues to rise.

3. All your Earnings Grow Tax-Free

With a self-directed IRA, you can see your investments accumulate tax-deferred. Also, being a tax-advantaged account, the possibility of large tax deductions also gets eliminated which boosts your retirement reserve significantly. When these tax advantages are combined with diversified investments, it creates a win-win situation for you.

4. Tax Saving Perks

A self-directed IRA does not limit you to the investment options of an IRA trustee or a custodian’s restricted range of mutual funds, bonds and stock but you get the same tax advantages and flexibility to make the most of compounding effect.

5. Transparency and Security

The structure of a self-directed IRA ensures that you are the only one who can access transaction records and account details. This eliminates every possibility of conflicting interests which is often the issue with a traditional custodial plan.

6. Creates Wealth for Future Generations

A self-directed IRA facilitates fast and easy transfer of assets with negligible tax implications. It not only allows you to stretch the benefits of your wealth to your future generations with highest possible contributions but also gives you access to a much broader category of investments.

A financially secure future requires retirement planning and the best way to maximize your savings is to invest in a self-directed IRA that secures your hard-earned assets with tax advantages and investing diversity.

To learn more about Rick Pendykoski, visit Self Directed Retirement Plans LLC.