Many people dream of an early retirement. There are no guarantees that any retirement savings account will allow for early retirement but starting to save for retirement as soon as you can will improve your chances of retiring early. Since you can make withdrawals without a penalty from an IRA at 59 1/2, a few years before you can receive Social Security benefits an IRA can be a wise choice for anyone who wishes to retire before 65.
A Simplified Employee Pension (SEP) plan is a way for business owners to contribute to their employees' retirement accounts. SEP IRA accounts are traditional IRAs, therefore SEP IRA rules are the same as traditional IRAs when it comes to contributions, withdrawals, and investments.
Yes, you can use both a Roth IRA and a 401k to save for retirement. If you are within the income limits to qualify for a Roth IRA and are currently maxing out your employer-sponsored 401k, starting a Roth IRA is a good way to maximize your retirement savings. Additionally if you have held a number of different jobs you may have several 401k accounts. You can roll all of them into a single IRA account to simplify your money management.
Both 401ks and IRAs are tax-deductible ways to save for retirement. However a 401k is not an IRA. A 401k plan is a feature of a qualified profit-sharing plan that allows employees to contribute a portion of their wages to individual accounts. An IRA is an individual retirement account that is solely the vested interest of the individual who holds the IRA. The plans have some similarities but they are not the same.
It is not permitted to take a loan out from an IRA or any other IRA-based plan like a SEP, SARSEP or SIMPLE IRA. It is only possible tot take out a loan from certain qualified plans, including:
those that satisfy the requirements of 401(a), annuity plans that satisfy the requirements of 403(a) or 403(b),
and from governmental plans.
If money is taken out an IRA, the IRA is no longer an IRA and the entire value of the IRA becomes taxable income.
Lance Wallach on IRA Help © ALL RIGHTS RESERVED.