Best Retirement Plans for 2022
Regardless of which stage you are in life, it’s important to take stock of your retirement planning and make sure you’re on track to meet your goals. Whether you’re just starting to save or you’ve already retired, there are steps you can take to ensure a comfortable retirement. William Schantz of mafllc will now explain what some of the best retirement plans are in 2022.
Best Retirement Plans for 2022
IRA Plans
The most popular retirement plan is still the IRA. An IRA is a retirement account that you set up with a financial institution. You contribute money to the account, and the money grows tax-deferred. That means you don’t have to pay taxes on the money until you withdraw it in retirement.
There are two main types of IRAs: traditional and Roth. With a traditional IRA, you get a tax deduction for your contributions. With a Roth IRA, you don’t get a tax deduction, but your withdrawals are tax-free in retirement.
If you’re trying to save for retirement, William Schantz believes that an IRA is a great option. You can contribute up to $6,000 per year ($7,000 if you’re over 50). And if you have a 401(k) at work, you can also contribute to that.
Defined Contributions Plans
A defined-contribution plan is a retirement plan where you or your employer contribute money to an account. The most common type of defined contribution plan is a 401(k). With a 401(k), you can contribute up to $19,500 per year ($26,000 if you’re over 50).
Your employer may also match your contributions up to a certain amount. For example, your employer might match 50% of your contributions, up to 6% of your salary. That means if you make $50,000 per year and you contribute 6% of your salary to your 401(k), your employer would contribute $1,500.
With a defined contribution plan, the investment choices are usually limited to the options offered by the plan. And the fees can be high, so it’s important to compare different plans before you decide which one to invest in.
Cash-Balance Plans
A cash-balance plan is a type of defined contribution plan. With a cash-balance plan, your employer contributes a fixed percentage of your salary to your account each year. The account balance grows tax-deferred, and you can usually invest the money in a variety of investment options.
When you retire, you can take distributions from the account. The distributions are taxed as ordinary income. But if you wait until you’re at least 59 1/2, you can take distributions without paying any taxes.
According to William Schantz, cash-balance plans are becoming more popular, especially for small businesses. They’re easy to set up and administer, and they give employees more control over their retirement savings.
Nonqualified Deferred Compensation Plans (NQDC)
A nonqualified deferred compensation plan is an employer-sponsored retirement plan that allows you to defer taxes on a portion of your income. With an NQDC, you agree to receive payments in the future in exchange for services rendered today. The payments can be made in a lump sum or in installments.
The money in an NQDC grows tax-deferred, and you don’t have to pay taxes on the money until you receive the payments. That means you can grow your account balance without having to pay taxes.
NQDCs are popular with executives and other high-earners who want to save for retirement without paying taxes on the money until they retire.
Conclusion
Above are some of the most common retirement plans that William Schantz believes you should consider. Planning for your retirement early on is always a sign that you have or are starting to get things straight.
