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Retirement savings accounts help you grow your savings over the years through a mix of contributions and investments so you can live comfortably in retirement.
Before opening a retirement savings account in Florida, you should compare the options and select the type of account that makes the most sense for your retirement goals.
Our guide to the different types of retirement savings accounts will help you make the right decision.
Different Types of Retirement Accounts
Saving for retirement with a credit union has several benefits. You can expect lower fees, better service, and a more personalized approach.
Plus, credit unions offer a wide range of retirement accounts.
Traditional IRAs
A traditional Individual Retirement Account allows you to make contributions before taxes and pay taxes on your withdrawals during retirement. It's a popular option for lowering your taxable income before you retire and benefiting from a lower tax rate if you expect to be in a lower tax bracket in retirement.
Roth IRAs
With a Roth IRA, you can make contributions after taxes, which means you won't pay taxes in retirement. These accounts also allow for more flexibility in retirement since they don't have mandatory withdrawals.
401(k) Plans
While IRAs are individual accounts that you can open and manage on your own, 401(k) plans are a type of retirement plan offered by your employer. The benefits include automated contributions from your paychecks and a potential match from your employer.
You can find traditional 401(k) plans with pre-tax contributions and Roth 401(k) accounts with contributions made after taxes.
Simplified Employee Pension (SEP) IRAs
A SEP IRA is a type of retirement account that is either available through your employer or that you can qualify for as a self-employed individual. It's easier to manage compared to a 401(k), contributions are tax-deductible, and you'll benefit from a tax-deferred income in retirement.
Comparing Credit Union Retirement Accounts
We recommend considering the following factors when choosing a retirement savings account in Florida.
Tax Structure
Tax-deferred accounts like Traditional IRAs, 401(k)s, and SEP IRAs allow you to contribute with your pre-tax dollars. There is an immediate benefit since your taxable income is lower, and you'll save on taxes in retirement if you expect your income to be in a lower tax bracket.
Products that let your money grow tax-free, like Roth IRAs, are advantageous if you expect to be in a higher income bracket once you retire.
Investment Options
The investment options you have access to can vary based on the account type and the custodian you choose. Fees can also vary.
Consider whether a self-managed account makes sense or whether it's best to pay a fee to have a professional manage your account. You'll want to diversify your portfolio with a mix of high-risk, high-yield investments and low-risk, low-yield investments. Be sure that your institution provides access to various investment vehicles, including stocks, bonds, ETFs, mutual funds, annuities, and more.
Contribution Limits and Withdrawals
The IRS sets annual contribution limits. For 2024, the 401(k) contribution limit is $23,000, while the total limit across all your IRAs is $7,000. You can qualify for additional catch-up contributions as you approach retirement.
Withdrawal rules include a 10% early withdrawal penalty for all retirement accounts and mandatory withdrawals once you turn 73 for Traditional IRAs and 401(k)s.
How to Choose the Right Retirement Savings Account in Florida
Choosing a retirement account is a personal decision. Here are a few things to consider:
The right retirement savings account should align with your unique needs and long-term goals. Choosing a credit union as your account's custodian has several benefits, including lower fees, better service, and personalized guidance.
At Power Financial Credit Union, we offer Traditional, Roth, and SEP IRAs with one-on-one investment advice to help you plan for retirement. Take a look at our retirement central platform to get started, or contact us if you have any questions.
Retirement savings accounts help you grow your savings over the years through a mix of contributions and investments so you can live comfortably in retirement.
Before opening a retirement savings account in Florida, you should compare the options and select the type of account that makes the most sense for your retirement goals.
Our guide to the different types of retirement savings accounts will help you make the right decision.
Different Types of Retirement Accounts
Saving for retirement with a credit union has several benefits. You can expect lower fees, better service, and a more personalized approach.
Plus, credit unions offer a wide range of retirement accounts.
Traditional IRAs
A traditional Individual Retirement Account allows you to make contributions before taxes and pay taxes on your withdrawals during retirement. It's a popular option for lowering your taxable income before you retire and benefiting from a lower tax rate if you expect to be in a lower tax bracket in retirement.
Roth IRAs
With a Roth IRA, you can make contributions after taxes, which means you won't pay taxes in retirement. These accounts also allow for more flexibility in retirement since they don't have mandatory withdrawals.
401(k) Plans
While IRAs are individual accounts that you can open and manage on your own, 401(k) plans are a type of retirement plan offered by your employer. The benefits include automated contributions from your paychecks and a potential match from your employer.
You can find traditional 401(k) plans with pre-tax contributions and Roth 401(k) accounts with contributions made after taxes.
Simplified Employee Pension (SEP) IRAs
A SEP IRA is a type of retirement account that is either available through your employer or that you can qualify for as a self-employed individual. It's easier to manage compared to a 401(k), contributions are tax-deductible, and you'll benefit from a tax-deferred income in retirement.
Comparing Credit Union Retirement Accounts
We recommend considering the following factors when choosing a retirement savings account in Florida.
Tax Structure
Tax-deferred accounts like Traditional IRAs, 401(k)s, and SEP IRAs allow you to contribute with your pre-tax dollars. There is an immediate benefit since your taxable income is lower, and you'll save on taxes in retirement if you expect your income to be in a lower tax bracket.
Products that let your money grow tax-free, like Roth IRAs, are advantageous if you expect to be in a higher income bracket once you retire.
Investment Options
The investment options you have access to can vary based on the account type and the custodian you choose. Fees can also vary.
Consider whether a self-managed account makes sense or whether it's best to pay a fee to have a professional manage your account. You'll want to diversify your portfolio with a mix of high-risk, high-yield investments and low-risk, low-yield investments. Be sure that your institution provides access to various investment vehicles, including stocks, bonds, ETFs, mutual funds, annuities, and more.
Contribution Limits and Withdrawals
The IRS sets annual contribution limits. For 2024, the 401(k) contribution limit is $23,000, while the total limit across all your IRAs is $7,000. You can qualify for additional catch-up contributions as you approach retirement.
Withdrawal rules include a 10% early withdrawal penalty for all retirement accounts and mandatory withdrawals once you turn 73 for Traditional IRAs and 401(k)s.
How to Choose the Right Retirement Savings Account in Florida
Choosing a retirement account is a personal decision. Here are a few things to consider:
- Does your employer offer a 401(k) plan? If yes, the higher contribution limit and potential employer match typically make this plan your best retirement option. You can open an IRA as a complement.
- Think about your retirement goals. Set a target date, then determine how much you can contribute annually and how quickly you want your money to grow.
- Consider opening a retirement account with a credit union to save on fees and benefit from personalized investment guidance to support financial wellness.
- You don't have to make this decision alone. A financial advisor or credit union representative can review your goals and recommend the best retirement product.
The right retirement savings account should align with your unique needs and long-term goals. Choosing a credit union as your account's custodian has several benefits, including lower fees, better service, and personalized guidance.
At Power Financial Credit Union, we offer Traditional, Roth, and SEP IRAs with one-on-one investment advice to help you plan for retirement. Take a look at our retirement central platform to get started, or contact us if you have any questions.