Tips for choosing the best retirement plan
The 401(k), the IRA, the 403(b), the 457 Plan, the Solo 401(k), the Simple IRA, the SEP IRA everyone is familiar with or has heard of Uncle Sam’s shorthand for popular retirement plans offered to the working populace of the country. while plans can be broadly divided into Individual plans (Rollover, IRAs, myRAs, Spousal IRAs, Roth IRAs and the usual traditional IRAs), Defined/Employer-sponsored retirement plans (Thrift Savings Plans, 457(b)s, 403(b)s/TSAs, Roth 401(k)s and the usual 401(k)s), and the Self-employed retirement plans (Simple IRAs, Solo Roth IRAs/Solo 401(k)s, etc.). While you may easily deduce which category you come under, how do you know which retirement plan suits you best?
Read on for some tips:
Fees and charges
One should find out what fees one is exactly paying. In order to do so, look for these two key phrases expense ratio and administrative expenses. Look for numbers such as 1.4, 1.8 or 1.6 that’s your expense ratio, which essentially is the percentage of your assets that he 401(k) providers will take from you annually.
Read, research and compare
The internet is your best friend. Read, read and read some more to know about and compare charges and fees and find out how much you’re being charged in the long run.
Switch 401(k) providers or contribute to an IRA
After asking the above-mentioned questions, you might find out that you’re paying really high cumulative fees until the time you retire. It is best to switch 401(k) providers in this situation. If you cannot switch 401(k) providers, contribute only enough to get the employer/company match and then contribute to an IRA instead, which could end with you saving a lot of money.
Read up and ask about what’s best for you
In the end, you might read up about the 10 best retirement plans but you need to choose wisely, depending upon a number of factors such as your age, your requirements and your risk tolerance. Make sure to shop around a bit before choosing a retirement plan.
