Alternative Retirement Plan Options

Alternative Retirement Plan OptionsBy Toma Franklin, Staff Writer

You aren't happy with your current retirement savings plan, and you're not alone. Many employees report some level of dissatisfaction with their company's retirement plan, which is why it behooves you to know that you do have other options available. Your retirement plan is your security for the future, and as such, you should never feel like you have to settle.

Tax Advantaged Options Beyond the Traditional Retirement Fund


IRAs are different from traditional 401k and 403(b) plans for the simple reason that they allow you more flexibility with your investments, and greater investment options. There are different types of IRAs available, and depending on your circumstances, some may be better choices than others.

The Roth IRA

For many people, particularly those who are not close to retirement, this type of IRA is the best option. As long as you are not in a lower tax bracket when you withdraw from the account then you were when you opened it, you should end up with a sizable return (assuming that you are a judicious saver and investor, of course) and withdrawals are tax free as long as you've held the account for at least five years and are aged 59 ½ or older when you begin withdrawing from it.

The Traditional IRA

If you and your spouse don't qualify for an employee retirement plan, you have the option of opening a tax-deductible IRA for 2007 and deduct your IRA contributions of up to $4,000. ($5,000 for those aged 50 and older) If you do have a work retirement plan, you can also deduct some of your IRA contributions, but the actual amount can vary between individuals, so it is best to ask your financial planning advisor and benefits director about your specific options.

When You're Self Employed

Self employed individuals can contribute significantly more to their retirement accounts, and can also claim tax deductions for those contributions. Your best options are SEP-IRAs, Solo 401ks, and Keogh plans.

More Investment Options

Rolling Over Your Retirement Account

If you leave your job or are asked to leave, you can roll your retirement-account savings into your IRA, which will increase your investment options. With an IRA, you have more freedom to invest in multiple mutual funds and stocks simultaneously.

Variable Annuities

Your best option for variable annuities is to look to a mutual fund company. This is because variable annuities offered by insurance companies typically offer only high fees and limited investment options. You should only consider a variable annuity when all of your IRA account options have been maxed out, because even though there are no caps on annuities, you are required to pay annual fees to cover the insurance. This means that you will have to hold on to your annuity for 10-15 years in order to see a solid investment return.