Types of Retirement Plans

What type of retirement accounts are there? What are the pros and cons about retirement accounts?

401(k) plan is one of the most popular plans offered by the employer to their employees.

Here you will see some pros and cons about 401(k)Plan. Let's start with Pros of having a 401(k) plan.

401(k)Plan Pros

Tax Advantages: Contributions to a traditional 401(k) are made pre-tax, which reduces your taxable income in the year you contribute. This can lower your overall tax bill. Roth 401(k)s offer tax-free withdrawals in retirement, as contributions are made after-tax.

Employer Match: Employer can match up to 50% up to a certain limit.

Higher Contribution Limits: Higher contributions limits compared to other retirement accounts such as IRAs. For 2024 there is a $23,000 limit and $30,500 if you are over 50 years old.

Protection from Creditors: Protection from creditors in the event of bankruptcy or lawsuits under the Employee Retirement Income Security Act (ERISA). ERISA protects a lot of employer-sponsored retirement plans such as 401(k)s, 403(b)s, pensions, and profit-sharing plans.

Disclaimer: WealthBro.com is for educational purposes and should not be taken as legal advice. Please seek a professional for any investment, financial and legal advice.

wealthbro777@gmail.com

Copyright © 2025 WEALTHBRO.COM. All rights reserved.