A number of different options for personal retirement accounts currently exist; but trying to decide which one suits your current situation, and has the best likelihood of meeting your future goals and needs can be difficult.


401(k)’s were devised by Congress in 1978 to encourage Americans to save money for their retirement by creating an employer sponsored savings plan with several unique advantages.  First, employees participating in a 401(k) plan can have their contributions automatically withdrawn from their paychecks, making saving nearly effortless.  Moreover, employee contributions to 401(k)’s are made prior to taxes being withheld, thus reducing your taxable income; and, since taxes on the interest earned with eligible retirement savings plans are deferred until the funds are distributed, the money in a 401(k) grows at a faster rate.

In addition to the benefits of tax deferment, many employers make a matching contribution to their employees’accounts—often around $0.50 per dollar contributed by the employee, but sometimes much higher.  In 2014, employees will be limited to a maximum annual contribution of $17,500; on top of which, employers can contribute matching funds however they choose, so long as the total annual contribution does not exceed $52,000 or 100% of the employee’s salary (whichever figure is lower).

Withdrawing money early from a 401(k) is costly, and should be avoided.  In addition to paying income taxes on money withdrawn from a 401(k), taking money out before age 59-and-a-half results in a 10% early withdrawal fee.  In the event that you change jobs, you can either leave your 401(k) plan alone, or roll it over into an individual retirement account.

One common criticism of 401(k) plans is that account holders have little control over how their money is invested.  In many cases, the company sponsoring the 401(k) invests a significant portion of its employees’retirement savings in its own stock; which can lead to devastating results in the event that the company suffers losses, or goes bankrupt.

Traditional IRA

Established in 1974, individual retirement accounts differ from 401(k) plans in that, where the latter is sponsored by an employer, anybody can open their own IRA and start contributing to it.  In both account types, there is a limit to how much you can contribute each year; and in the case of an IRA, that limit is significantly lower—$5500 if you’re younger than 50-year’s old, $6500 if you’re 50 or older.  In most cases, you won’t receive matching contributions; but you will have more control over how your money is invested.

As with a 401(k), contributions to a Traditional IRA can be automatically withdrawn from the account holder’s paycheck; money contributed is deducted from your taxable income; the savings account benefits from tax deferred growth; and you won’t pay taxes on your retirement income until you withdraw it.  However, you must satisfy strict requirements to realize these benefits.  If you already have an employer sponsored retirement plan, your 2014 contributions to a traditional IRA are only fully deductible if your modified adjusted gross income is $60,000 (single or head of household status), or $96,000 (married filing jointly, or qualifying widow). If you don’t have an employee sponsored plan, you can deduct up to the maximum contribution regardless of modified adjusted gross income; unless you have a spouse who is covered by a plan at work.  In that case, your modified AGI must be less than $181,000 (filing jointly) or less than only $10,000 (filing separately) to deduct the full amount.

In the event that you meet the eligibility requirements for a Traditional IRA, you may want to consider whether you expect to be in a higher or lower tax bracket during retirement.  If you anticipate a being in a lower tax bracket than you currently are, then it makes sense to defer the taxes until that time.  If, however, you expect to be in a higher tax bracket after retirement, you may want to consider a Roth IRA.

Roth IRA

A Roth IRA has the same contribution limits as a Traditional IRA, but those contributions are not tax deductible.  The benefit of a Roth IRA is that, by paying income taxes up-front on the money that you save for retirement, you avoid paying taxes on the qualified withdrawals you make at a later date.  That means a Roth IRA is a better choice if you anticipate being in a higher tax bracket during retirement than you currently are.  It’s also a better choice if you are 70-and-a-half-years or older and wish to keep investing in an IRA; or if you think you might need to access the funds in your savings plan before retirement.


A Simplified Employee Pension Plan, or SEP IRA, is the best choice of retirement accounts for small business owners, entrepreneurs, and anyone with income from self-employment.  Under a SEP IRA, anyone earning income from self employment can contribute up to 18.6% of the net profit from their business to their own retirement plan.   In that manner, an SEP acts like a tax-deferred profit sharing plan. If the business owner pays himself a salary from his company, he can contribute up to 25% of his annual net wages. In the event that a small business owner has employees, those employees must receive the same retirement benefits under the SEP plan; provided they are at least 21-years old, have worked for the employer at least three of the previous five years, and earn at least $550 annually.


A Savings Incentive Match Plan for Employees (SIMPLE) allows businesses with fewer than 100 employees to enjoy many of the same benefits as a more conventional employee sponsored retirement plan, without the start up and operating costs of a 401(k).  Employers looking to establish a SIMPLE IRA may do so, provided they have no other retirement plan.


A SIMPLE IRA is the only individual retirement account plan that allows for matching contributions from an account holder's employer. Employers must make a contribution to each employee’s retirement accounts equal to 2% of that employee’s net wages, regardless of whether that employee makes his or her own contributions; but employees that do contribute to their plans can receive matching contributions up to 3% of their net wages.

As with a 401(k), funds held in a SIMPLE IRA are invested at the employers discretion.

Gold IRA

For many investors, the biggest advantage of a Traditional or Roth IRA over an employee-sponsored retirement plan, is the ability to control when, how, and where money is invested. That means account holders can choose to invest the money that they save for retirement in stocks, bonds, mutual funds, certificates of deposit, and even precious metals like silver, platinum, and gold. A precious metals IRA is an individual retirement account in which funds are held in the form of gold coins or bullion, instead of paper currency or securities. Investors typically buy gold to hedge against inflation, but simply buying and storing gold can be costly and inconvenient.  A gold IRA allows an investor to benefit from the advantages of investing in gold, while minimizing the expenses.  Coins and bullion in a Gold IRA are usually stored in a secure depository; and account holders can have them delivered, or sold for cash upon withdrawal.

A Gold IRA is an excellent choice for investors who anticipate a future weakness in the strength of the U.S. dollar, or continued increases in the value of precious metals.  You can check online for Best Gold IRA Company Reviews to make sure that you get the data from other people investing in it too!