Health Savings Accounts (HSAs):
is a tax-advantaged medical savings account available to taxpayers
in the United States who are enrolled in a High Deductible Health
Plan (HDHP). The funds contributed to the account are not subject
to federal income tax at the time of deposit. Unlike a flexible spending
account (FSA), funds roll over and accumulate year over year if not
spent. HSAs are owned by the individual, which differentiates them
from the company-owned Health Reimbursement Arrangement (HRA) that
is an alternate tax-deductible source of funds paired with HDHPs.
Funds may be used to pay for qualified medical expenses at any time
without federal tax liability. Withdrawals for non-medical expenses
are treated very similarly to those in an IRA in that they may provide
tax advantages if taken after retirement age, and they incur penalties
if taken earlier. These accounts are a component of consumer driven
health care.
IRA's
An Individual Retirement Arrangement (or IRA) is a retirement
plan account that provides some tax advantages for retirement
savings in the United States.
Roth IRA
- In contrast to a traditional IRA, contributions
to a Roth IRA are not tax-deductible. Withdrawals are generally
tax-free, but not always and not without certain stipulations
(i.e. tax free when the account has been opened for at least 5
years for principal withdrawals and the owner's age is at least
59 ½ for withdrawals on the growth portion above principal.)
An advantage of the Roth IRA over a traditional IRA is that there
are fewer withdrawal restrictions and requirements. Transactions
inside the Roth IRA account (including capital gains, dividends,
and interest) do not incur a current tax liability.. Named for
Senator William Roth. TRADITIONAL IRA
- contributions are often tax-deductible
(often simplified as "money is deposited before tax"
or "contributions are made with pre-tax assets"), all
transactions and earnings within the IRA have no tax impact, and
withdrawals at retirement are taxed as income (except for those
portions of the withdrawal corresponding to contributions that
were not deducted). Depending upon the nature of the contribution,
a traditional IRA may be referred to as a "deductible IRA"
or a "non-deductible IRA." SEP IRA - a provision
that allows an employer (typically a small business or self-employed
individual) to make retirement plan contributions into a Traditional
IRA established in the employee's name, instead of to a pension
fund account in the company's name. SIMPLE IRA - a simplified
employee pension plan that allows both employer and employee contributions,
similar to a 401(k) plan, but with lower contribution limits and
simpler (and thus less costly) administration. Although it is
termed an IRA, it is treated separately. SELF DIRECTED IRA
- a self-directed IRA that permits the account holder to make
investments on behalf of the retirement plan.
Roth's
ROTH IRA In contrast
to a traditional IRA, contributions to a Roth IRA are not tax-deductible.
Withdrawals are generally tax-free, but not always and not without
certain stipulations (i.e. tax free when the account has been opened
for at least 5 years for principal withdrawals and the owner's age
is at least 59 ½ for withdrawals on the growth portion above
principal.) An advantage of the Roth IRA over a traditional IRA
is that there are fewer withdrawal restrictions and requirements.
Transactions inside the Roth IRA account (including capital gains,
dividends, and interest) do not incur a current tax liability.
ROTH 401K combines
features of the traditional 401(k) with those of the Roth IRA. It's
offered by employers like a regular 401(k) plan, but as with a Roth
IRA, contributions are made with after-tax dollars. While you don't
get an upfront tax-deduction, the account grows tax-free, and withdrawals
taken during retirement aren't subject to income tax, provided you're
at least 59 1/2 and you've held the account for five years or more.
401K's: A qualified plan established by employers
to which eligible employees may make salary deferral (salary reduction)
contributions on a post-tax and/or pretax basis. Employers offering
a 401(k) plan may make matching or non-elective contributions to the
plan on behalf of eligible employees and may also add a profit-sharing
feature to the plan. Earnings accrue on a tax-deferred basis.