Question

Please indicate two UNIQUE (cannot be shared by any of the other sources listed) features for each of the sources of retirement below:

1. 401k

2. Social Security

3. Individual IRA

4. Roth IRA

5. Annuity

Answer 1

1) 401k:

• Under 401k, employee make contribution to their 401k account and employers match some or all of the contribution made by employee.
• the investment earning are not taxed until the employee withdraws that retirement money.

2) Social security:

• social security works by a pool of contributions by worker and then paying the benefits to those who are eligible for it.
• you can start receiving your social security retirement benefit as early as the age of 62. However, full benefit can be received when you reach the full retirement age.

3) Individual IRA:

• Individual retirement account is a tax advantage investing tool to designate fund for retirement savings.
• It helps in gaining access to a potentially wider range of investment choices like stock, bonds, ETFs and mutual funds than the employer sponsered programme.

4) Roth IRA:

• Roth IRA rules state that as long as you owned your account for 5 years and you are of age 59,5 or older, you can withdraw your money without any federal tax.
• It is a special retirement scheme where you pay taxes on money going into your account and withdrawals are tax free.

5) Annuity:

• Annuity is a guaranteed income for life.
• Annuity is a contract between individual and insurance company.