When will you start planning for your personal pension? How long and how much can you invest every month for ensuring a healthy ROI? Are you an employee? Is there an employer-sponsored pension plan in your workplace? If yes, what is the monthly pension you get after retirement? Can it meet your personal and family needs and wants? If your answer is no to any of the previous four questions, you need a better pension plan.
What is Your Profession?
Small Business: Solo 401(k) S is a highly recommended pension scheme. The present contribution limit is $18K if you are under 50. $24K is the contribution limit if you are above 50. You must be the owner of a Single-Owner business with no employees.
The plan covers you and your spouse. When you choose Roth solo401(k), the tax benefits are stated to be better. Pre-tax payment options allow you to increase your savings at the time of retirement. There is no age limit for starting your contributions. The recommended age is 30.
You can contact an online broker or the Bank of America directly. There is also May other banks and financial institutions which offer the simple/Roth solo 401(k) plan.
The key benefit is the loan you get from your savings. The maximum limit is 50% of your net savings and the loan money is $50K. Interest on loans is 1%. The investments you make can earn good dividends and interests.
Employee: Roth IRAs are the recommended pension plans if you are an employee and no employer contribution for your pension plan. You can also use it if you are a self-employed individual. You can make a maximum annual contribution of $55K regardless of your age. The present interest rate you earn on your savings is 8%.
Roth IRA can be beneficial if you change your jobs frequently and you have no other secure pension plans. You choose to withdraw the entire money after retirement or draw only the interest value every month as a pension. Your withdrawals are free from tax.
IRA-Rollover Loan is available for a short term. It is free of interest and returnable within two months. An extension can result in a 10%penalty.
Pension Plan with Loan
Credit unions offer you pension plans with options for loans. You may be an employee, owner of a small business, or a self-employed individual. Your maximum annual contributions can be $60K. Pre-tax and Post-Tax are the two options you have. The unions offer home-loans at affordable interest rates.
The plan is backed by a maximum insurance scheme of $250K. You may transfer a part of your savings onto a money market account, share certificates, or IRA depending on your convenience.
Investments into money market accounts could be an attractive option since it can generate handsome ROI every month. The risk factors could be variable, depending on the market conditions. Investments into share certificates from logistics companies and other stable industries can earn you handsome ROI every month with the lowest possible risk factors.