401k plans are an excellent way to save for retirement. A 401k is a great benefit that many employers are offering these days. You’re able to deduct 401k contributions from your payroll. This is a convenient way to dollar cost average. A lot of employers are offering a 401k match these days. This allows you out even more away in your 401k. If you have this benefit it’s critical to your retirement that you take advantage of a 401k retirement plan.

If you don’t have a 401k plan to take advantage of, you can take advantage of an Individual Retirement Account, or IRA Account. An IRA account allows you as an individual to take your retirement into your own hands. You can get the similar tax savings as a 401k. The disadvantage with an IRA account as opposed to a 401k plan is that you don’t have as high of contribution limits and you won’t be getting an employer match. The important thing is that you start saving for retirement whether it’s contributing to an IRA account or a 401k plan.

Qualified plans like IRA accounts and 401k accounts have certain specifics when it comes to withdrawals. In a traditional IRA accounts you must wait until you’re 59 and ½ before you can start taking income. You are required to start taking income at 70 and ½, this is called a Required Minimum IRA Distribution, or RMD. Required Minimum Distribution was put in place so that your pre tax dollars are withdrawn into post tax dollars. Basically, Required Minimum IRA Distribution insures that you ultimately pay your taxes on money you may have written off long ago. Required Minimum IRA Distribution’s will continue until death, or your IRA account or 401k plan is completely withdrawn.