Plans for Retirement

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Retirement is often in the front of many U.S. workers minds during their later year of employment. However, the most important undertakings of retirement happen during ones first few years in the job industry. There are many options available to employees and employers alike, and to make the proper decision one must have at least a basic understanding of opportunities made accessible to them. This paper will discuss the individual retirement accounts, pensions plans and the benefits made available by social security. It will go into depth on the benefits are of a 401k plan and Roth IRA, the difference between defined benefit and defined contribution pensions, and discuss who is eligible for certain benefits afforded by social…show more content…
Yet another type of individual retirement plan is the Keogh plan. A Keogh plan differs from IRAs and 401(k) s in that they are designed for self employed professionals, typically small business owners. Full time employees of a small business must be included in the plan if they have worked for the company for at least three years. (3) As with the other retirement plans mentioned, one cannot take money out of a Keogh until the age of 59 ½ years without penalty. Keogh plans also allow individuals to put their funds into the plan on a tax free basis, with the individual paying taxes upon withdrawal. Small business owners can set their own eligibility requirements for employees to meet in order to take part in a Keogh. For example the employer can require employees to be full time, to meet a certain age requirement (cannot exceed 21 however), and to have worked for the company for a set amount of time. (3) Keogh plans are attractive to small business owners because the funds put into the plan are allowed to grow tax free, however owners who invest in a Keogh plan need to weigh the costs with the benefits in order to gauge if a Keogh makes economical sense. Pensions are also an important consideration when making plans for retirement. A pension is similar to an individual retirement plans as they involve an account that the employee pays into. A pension is a steady

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