If you are self-employed or your employer
does not offer a tax-advantaged plan, start here.
Learn more about
individual retirement accounts.
If you fall within the
income limits for Roth IRA contributions, invest in this account up to the maximum allowed first. Contributions are after-tax but grow tax-free.
Learn
how to invest in a Roth IRA.
If you are over the income cap or have a reduced Roth IRA limit, contribute the remainder of the annual limit to a Traditional IRA. Contributions are tax-deductible and reduce your taxable income.
Learn
how to invest in a traditional IRA.
If your
employer has a sponsored plan, consider investing here before an IRA, especially if the plan offers
matching contributions.
Learn more about
employer-sponsored retirement accounts.
The most well-known employer-sponsored retirement plan. This is offered to private sector employees, often with company match on a vesting schedule. Contributions can be pre-tax or Roth.
Like a 401(k) but for government and non-profit employees. Contributions can be pre-tax or Roth with employer matching allowed.
Offered to non-profit and government employees, like the 403(b). This plan typically offers more flexibility than a 403(b) in terms of investment options and can offer matching contributions from the employer. Commonly used in conjunction with the 403(b) plan.
Those on a high-deductible health plan (HDHP) can contribute toward future medical care costs in this account.
The only quadruple tax-advantaged account: tax-free contributions, pre-FICA contributions, tax-free growth & withdrawals. Ideally, you withdraw small amounts to let the bulk of the money compound. Suited for those with lower medical care costs in a typical year.
A standard "investment" account. Offers no tax benefits, so best to maximize the other accounts first.
Allows the purchase of stocks, bonds, index funds & advanced securities like options and futures. This should be a smaller focus in your initial investing plan since money is subject to taxation immediately.