There are 2 places where you can save your retirement money.
First, is called Tax-Deferred/Tax-favored retirement accounts or commonly known as QUALIFIED PLAN. This simply mean that you WILL have to pay taxes when you retire. Examples of these accounts are:
- Individual Retirement Account (IRA)
- SEP IRA
- 401k (offered by for-profit employers)
- 403b (offered by non-profit employers such as government, etc)
- 529 (education savings plan)
So if you prefer to save on taxes NOW and pay taxes LATER (tax rates may go up when you retire), this is the best option to save your retirement money.
Second, is called NON-QUALIFIED retirement accounts. Main example of these accounts are:
- Roth IRA
This means the contribution deducted for these plans are taxed when income is recognized. This also means that you WILL NOT pay any taxes when you retire.
These 2 strategies are important to consider when you plan your retirement with your financial advisor.