Retirement is one of the most important topics in the personal finance field. However, it is also one of the most overwhelming topics to the majority of people. One of the most confusing topics about retirement is the sheer number of different types of retirement plans that are available. Well the good news is that I have compiled all of them here. And so that you don’t have to read all 14 articles (unless you really want to), I have an overview of all the different types of retirement accounts here for you. Happy reading!
(1) Retirement Plans for Employees
Employees of For-Profit Companies
If you are an employee of a for-profit company (which most companies are) you are going to have a number of options. However, most employers just offer one or two of these retirement plans. For-profit companies can offer:
- 401k (including Roth 401k)
- SIMPLE IRA
- SEP
- SARSEP
- Profit Sharing Plan
- ESOP
For the majority of those working in a for-profit company, you will have a 401k and/or a Roth 401k offered to you.
If you work for a smaller company, you could have a SIMPLE IRA, SEP, or SARSEP offered to you.
If you are purchasing part of the company, you can do it through an ESOP.
And any size company can offer a Profit Sharing Plan if they so choose.
All of these options have different pros and cons and different tax treatments. Click on the hyperlink of any of these to learn more about them.
Also, PLEASE remember that each of these plans is simply a bucket to put your investments in. Having a 401k, SIMPLE IRA, SEP, etc. is awesome! But you HAVE to make sure that the investments within that plan are going to benefit you in your specific situation. 🙂
Employees for Non-Profit Companies
If you work for a church, hospital, school district, etc. you probably don’t have the options available to invest in your retirement above. The exception to this would likely be a Profit Sharing Plan. You have a different retirement plan available to you.
- 403b (including Roth 403b)
A 403b is simply the non-profit version of a 401k. It is set up basically the same way. Click on the hyperlink to learn more about how a 403b plan works if you have one available to you.
Employees of the Federal Government
If you work for the federal government, one of its entities, or are in the US military you likely have a different retirement plan available to you.
A TSP is basically the governmental version of a 401k. It has most of the same rules and regulations but some of them are different from the other types of retirement accounts. Click the link to learn more about the TSP if you have one available to you.
(2) Retirement Plans for Self-Employed Individuals
If you are self-employed, you have a whole number of options available to you. You don’t have to open all of them, of course. But you should consider which one is the best fit for you and how you are saving for retirement.
- SIMPLE IRA
- Simplified Employee Pension (SEP)
- Salary Reduction Simplified Employee Pension Plan (SARSEP)
- Payroll Deduction IRA
- Profit Sharing Plan
Each of these plans has a specific purpose. For most self-employed individuals, a SIMPLE IRA will work just fine. But depending on the specifics of your situation and your business, you might want to consider another different type of retirement account.
(3) Retirement Plans for Police, First Responders, Firefighters, Etc.
If you work for a municipal government, county, or are some sort of first responder, you likely have a different type of retirement account available to you.
A 457 plan is a really interesting type of retirement plan. It does not fit the normal mold of the other types. It is called a “non-qualified” retirement plan because of how it is deducted from your pay and its tax treatment. Click on the link to learn more about a 457 Plan.
(4) Retirement Plans That *Anyone* Can Open
Okay. So not anyone can open up these plans. They have different restrictions. However, these plans are opened up outside of your job. You can put money into these plans that you earn from a job, inherit, or find on the side of the road (with some exceptions). But if you are looking to open up a retirement plan OUTSIDE of your job, look here.
Both a Traditional IRA and a Roth IRA are treated very differently by the IRS. But they can both be very beneficial to most people. You should really check them out. They can be VERY helpful to those saving for retirement.
(5) Pension Retirement Plan
Pensions are a really interesting animal. But very few people have a pension available to them at their job. There are two main types of pension-like retirement plans.
Pensions can be a really useful tool but be careful to not rely SOLELY on them for your retirement. Remember, YOU should be putting money into a retirement savings vehicle. Don’t rely on someone else to do so.
Final Thoughts
This was a very brief overview of the different types of retirement accounts available. If I were to go into the details of each of these plans the article would be more like a book!
If you are wondering about which plan(s) is/are best for you, read some of the articles and you will get a pretty good idea.
If you are still confused, please don’t hesitate to reach out to me in the comments!
You can do this!
I will help you any way that I can!
Until next time!
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