Before any good event, there is always a pre-game. So, before we begin our epic retirement series that’s exactly what we’re going to do! We’ve got to get a few facts straight before we take our deep dive into everything you need to know about your retirement plan.
First, let’s go over a few terms...
IRA
– This acronym stands for Individual Retirement Account. We won’t be talking much about these over the next few weeks. We will save these for last.
401(k)
– This is a retirement plan sponsored by your employer and the subject of our discussions over the next few weeks. This is a qualified plan and tax-deferred plan. Contributions may be pre or post (Roth) tax.
403(b)
– This is a type of employer-sponsored retirement plan for those who work for nonprofit organizations like tax-exempt organizations, public schools, or churches. For some of you that have a 403(b) you have some additional benefits, like the ability to save a bit more, but not all participants of 403(b) plans are eligible for these additional benefits. However, for the purposes of our retirement discussion, when we talk about “retirement plan,” or “401(k),” we are lumping 403(b)s in the same category unless otherwise specified.
457
– This is another type of employer-sponsored retirement plan, usually for those affiliated with the state, local government, or some nonprofit organizations. These are non-qualified, tax-advantage, deferred compensation plans. We’ll get all into those details later.
Have a great weekend Savvies!
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