There are several retirement plans available for saving and sheltering money until you retire. The plan or plans that are appropriate for you depend on several circumstances including your job situation, marital status, etc.

Traditional IRA

A Traditional IRA (individual retirement account) is held at an institution such as a bank or brokerage, and may be invested in anything that the institution allows (including CDs, stocks, mutual funds etc.). The only criteria for an IRA contribution is sufficient income to make the contribution. The tax-deductibility of contributions has eligibility requirements based on income, filing status, and availability of other retirement plans. Generally, amounts in your IRA, including earnings and gains, are not taxed until they are distributed.

Roth IRA

A Roth IRA is a retirement plan that is generally not taxed, provided certain conditions are met. The Roth IRA’s principal difference from most other tax retirement plans is that, rather than granting a tax break for money placed into the plan, the tax break is granted on the money withdrawn from the plan during retirement. A Roth IRA can be an individual retirement account containing investments in securities, usually common stocks and bonds, often through mutual funds (although other investments, including derivatives, notes, certificates of deposit, and real estate are possible). A Roth IRA can also be an individual retirement annuity, which is an annuity contract or an endowment contract purchased from a life insurance company. there are fewer restrictions on the investments that can be made in the plan than many other tax advantaged plans. An advantage of the Roth IRA over a traditional IRA is that there are fewer withdrawal restrictions and requirements. Transactions inside an account (including capital gains, dividends, and interest) do not incur a current tax liability.


A SEP (Simplified Employee Pension) is a simplified employee pension plan. A SEP plan provides employers with a simplified method to make contributions toward their employees’ retirement and, if self-employed, their own retirement. Contributions are made directly to an Individual Retirement Account or Annuity (IRA) set up for each employee. SEP-IRA funds are taxed at ordinary income tax rates when qualified withdrawals are taken after age 59 and a half (the same rule as for traditional IRAs). Contributions to a SEP plan are deductible; they will lower a taxpayer’s income tax liability in the current year.


A SIMPLE (Savings Incentive Match Plan for Employees)IRA is plan that gives small employers a simplified method to make contributions toward their employees’ retirement and their own retirement. Under a SIMPLE IRA plan, employees may choose to make salary reduction contributions and the employer makes matching or non elective contributions. All contributions are made directly to an Individual Retirement Account or Individual Retirement Annuity (IRA) set up for each employee. SIMPLE IRA plans may be established only by employers that had no more than 100 employees who earned $5,000 or more in compensation during the preceding calendar year.


Complete Retirement Plan information can be found at the official U.S. IRS site