Retirement Planning

Retirement planning can include investing in 401(k)s, IRAs, and other plans. Some plans qualify for tax benefits if they meet certain requirements of the Internal Revenue Code. There are two basic types of retirement plans: defined benefit plans and defined compensation plans.

Defined Benefit Plans

In a defined benefit plan, retirement benefits are based on a formula which indicates what you can expect to receive when you retire, and management of your portfolio is left up to the company providing the plan.

Defined Contribution Plans

In a defined contribution plan, an amount or percentage is set aside for the plan each year, but the benefit is not fixed. Thus, there is no way to know how much the plan will pay upon retirement.