Understanding the Best IRA Companies | ApostolicCM.com Answers

If you are weighing using a 40K vs. an IRA, we have some helpful insight for you. Many consumers use two of the most typically type of retirement savings plans or option which include the 401K and the individual retirement account. We are going to provide some detailed information below that will help you compare the two types of retirement plans.

Advantages of 401K Plans

A 401K retirement plan is almost always provided b your employer, and this can be a great plan to select for your retirement. Especially if your employer is willing to match your contributions, which many do. Some of the benefits of choosing a 401K plan include:

Higher allowances ? 401K plans, like IRA options, have government-mandated limits on how much you can contribute per year. These limits in 2011 were just under $16K ? so plan accordingly. They should go higher moving forward. Employer matching which is the preferred option for most consumers . In most cases, your employer will match contributions to your 401K, sometimes up to 50-75% of what you deposit. This is an excellent way to boost your savings if the option is available to you.

You can also borrow money from your 401K, but not from an IRA saving option. While you typically do not want to remove 401K funds that could be earning interest, but have this option can come in hand for many consumers.

Some of the great things about IRA Plans

An IRA is not sponsored by your employer, but is set up separately with a bank or other financial institution that you opt for after careful research. Taking a look at 401K vs. IRA options, you will notice similarities, but IRA plans have very specific benefits, rules and regulations that you must adhere to moving forward. These include:

. Increased flexibility for most consumers/retirees ? An IRA gives you more freedom to invest in stocks, bonds, and mutual funds of your choice ? just about any type of investment that you opt for. By comparison, a 401K investment strategy is largely out of your hands, even if it is performing poorly; it?s handled by your employer and you have no control over it.

. Fewer penalties ? You can withdraw funds from an IRA without penalty for financing life expenses such as higher education, medical expenses, and a down payment on a home ? or just about anything you can think of. An IRA can be accessed easily, but there are penalties for not paying it back in a timely manner. Similar withdrawals from a 401K may be subject to a 10% penalty in most cases.

Making Your Selection ? 401K Vs. an IRA

The objective of comparing 401K vs. IRA options is to find the plan that will allow you to save the most and generate the most return for your investment dollars. In general, if you have a good 401K plan with your employer, it can usually help you save a substantial amount of money for retirement. and it?s tax protected in most cases. An IRA is best for investors that want to manage their savings independently and have more control over how their nest egg is invested and has the time and ability to research IRA vendors and can monitor the account moving forward.

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