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Table: Stashing Away More Retirement Cash


Cover Story

TABLE: Stashing Away More Retirement Cash

If you've made the maximum contribution to your 401(k) plan and want to do

more, here are your options:

NAME DESCRIPTION ADVANTAGES DISADVANTAGES

AFTERTAX Works like the Tax-deferred buildup May not be an

401(k) regular 401(k), of investment income, attractive alter-

except contribu- just like the regular native if the plan

tions come out 401(k). doesn't have de-

of aftertax in- sirable investment

come, with limits options.

on maximum

contribution.

AFTERTAX While the tax- Tax-deferred buildup Restrictions on

INDIVIDUAL deductible IRA of investment income. early withdrawal.

RETIREMENT is off-limits to Investor is not lim- When money is with-

ACCOUNT most people who ited to the 401(k) drawn, earnings are

have a pension plan's choices. taxed as income

plan, individ- even if they are

uals can still capital gains.

put up to $2,000 Extra investor must

a year ($2,250 keep track of nonde

for a couple) of -ductible contrib-

aftertax money utions.

into an IRA.

VARIABLE A mutual fund Tax-deferred buildup Fees can be high.

ANNUITY tucked inside an of investment Insurance charges

annuity "wrap- income. No limit on can add 1.25% more

per," often a amount of aftertax in expenses every

joint offering dollars that go into every year. Most

of an insurance plan. Investments variable annuities

company and a may be made at any have declining

mutual-fund time and in varying surrender charges.

company. amounts. Investor Restrictions on

is not limited to the early withdrawals.

funds in the 401(k)

plan.

DATA: BUSINESS WEEK


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