There are several ways to save money for retirement while you are working. Here are a few tips on what to be aware of when it comes to your retirement savings.
Typically, set up by an employer. Employers may match your contributions (up to a certain amount), using pre-tax dollars taken out of your paycheck. Once you start withdrawing money from a 401(k) you will owe taxes on it. 401(k)’s also require you take a yearly Required Minimum Distribution (RMD) starting at age 70½, whether you need the money or not. If you work for a company that offers you a 401(k) match, take it! Otherwise you are leaving free money on the table.
As a working individual, you may be allowed to contribute to a Traditional IRA which allows you to save money for retirement and defer your taxes until retirement. Traditional IRA’s provide the freedom to choose how to invest your money in things like, stocks, bonds, mutual funds, annuities and other strategies.
Allow an individual to save for retirement using after-tax dollars and take tax free withdrawals in retirement. There are no age restrictions on a Roth IRA, but they do have income-eligibility restrictions. Roth IRA’s are funded using after-tax dollars. Roth IRAs don’t have any RMDs. However, you do have to wait 5 years from the tax year of your first Roth IRA contribution before you can withdraw any money tax free.
Additional rules, requirements and limitations apply to each strategy. Be sure to discuss the details with your advisor before making decisions. If you would like help, give us a call today 801-465-6990!
This material is for informational purposes only and should not be considered advice. Investment advisory services offered through Retirement Solutions Investments, Inc., a Utah registered investment advisor. Insurance products and services are offered through Retirement Solutions, Inc., an affiliated insurance agency.
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