retirement and savings accounts

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Retirement and Savings Accounts are very common investment vehicles that you will almost certainly encounter! Here’s a primer.

retirement and savings accounts

new job starter pack (full-time)

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what's in this lesson?

Retirement and Savings Accounts are very common investment vehicles that you will almost certainly encounter! Here’s a primer.

retirement and savings accounts

new job starter pack (full-time)

Retirement and Savings Accounts are very common investment vehicles that you will almost certainly encounter! Here’s a primer.

overview

Retirement accounts are designed to help provide a vehicle for investing that’s taxed at a lower rate. You can’t access the money until you’ve reached retirement age unless you pay a penalty.

 

401(k)s

If you’re at a full time job, you’ll often be given a 401(k), which is a retirement account offered by employers. You can contribute to your 401(k) in every paycheck which reduces your taxable income (fewer taxes, yay!). Some employers will match contributions up to a certain amount every year, which is extra incentive to save in this manner! In a 401(k), you’ll have choice about where you want your money invested in the market.

 

IRAs

Two types of non-company-sponsored individual retirement accounts you’ll hear most about are traditional  IRAs and Roth IRAs. There are annual limits on how much you can contribute to these. In these retirement accounts, you can invest your money in the market and make nice returns that way!

 

Traditional IRAs are often tax deductible, and you can move and earn money in the IRA account without paying taxes. Withdrawals at retirement will be taxed as income.

 

Roth IRAs are similar except the money you put in is post-tax (not pre-tax like a traditional IRA). Withdrawals of the money you put in won’t be taxed!

If you haven’t already, check out our other investing lessons or jump into a new course! Happy learning.

 

Source(s): IRS.gov

How's it going?

resources

overview

Retirement accounts are designed to help provide a vehicle for investing that’s taxed at a lower rate. You can’t access the money until you’ve reached retirement age unless you pay a penalty.

 

401(k)s

If you’re at a full time job, you’ll often be given a 401(k), which is a retirement account offered by employers. You can contribute to your 401(k) in every paycheck which reduces your taxable income (fewer taxes, yay!). Some employers will match contributions up to a certain amount every year, which is extra incentive to save in this manner! In a 401(k), you’ll have choice about where you want your money invested in the market.

 

IRAs

Two types of non-company-sponsored individual retirement accounts you’ll hear most about are traditional  IRAs and Roth IRAs. There are annual limits on how much you can contribute to these. In these retirement accounts, you can invest your money in the market and make nice returns that way!

 

Traditional IRAs are often tax deductible, and you can move and earn money in the IRA account without paying taxes. Withdrawals at retirement will be taxed as income.

 

Roth IRAs are similar except the money you put in is post-tax (not pre-tax like a traditional IRA). Withdrawals of the money you put in won’t be taxed!

If you haven’t already, check out our other investing lessons or jump into a new course! Happy learning.

 

Source(s): IRS.gov

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