How To Choose an Investment Account for Teachers
Everyone has dreams for what they want their retirement to look like. Whether it’s moving somewhere warm, traveling the world, or anything else, these dreams all require money.
Saving for your future retirement is essential, and it is never too early to open up an retirement account and begin saving. NES advisors can help these retirement dreams become your future reality.
What Investment Options Do Teachers Have?
As an educator, you are offered unique retirement account options. Investing money, including investing funds into your retirement accounts, allows you to put this specific money to work and create passive income.
Although, before you start investing, you must open a retirement savings account. Roth IRAs, Traditional IRAs, 403 B Plans, and 529 College Saving Plans are examples of retirement accounts you may invest in as an educator. Each of these is explained in more detail below.
Roth IRAs are an excellent option for an individual retirement savings plan. Funds deposited into this account are initially taxed, then over time, they grow tax-free. It means that no taxes are paid when the funds are withdrawn during retirement.
When opening a Roth IRA, eligibility is based on your income. Additionally, contribution limits vary based on income. Although, unlike traditional IRA plans, there are no minimum withdrawal regulations after age 70 ½. Finally, principal contributions may be withdrawn at any given time without penalization.
Traditional IRA plans are also individual retirement savings plans, like the Roth IRA. Although, when contributing to a traditional IRA account, the funds are tax-deferred. It means that you will only pay taxes on funds when you withdraw them. A tax-deferred plan like the IRA is a great option, as these plans tend to grow faster than taxable plans.
A 403B retirement plan is exclusively offered to employees at educational institutions and some non-profits. With these plans, you can contribute funds with either a mutual fund or an annuity. Additionally, contributions and earnings are tax-deferred until withdrawing during retirement.
If you choose to contribute to a 403B plan, there are numerous benefits:
Supplemental funds for retirement.
Lower taxes due to tax deferment.
Additional tax savings, as earnings grow without taxes.
529 College Savings
If you are a parent or have plans to become a parent in the future, a 529 College Savings Plan may be a great option for you. This specific investment plan allows you to grow and withdraw funds tax-free if used for a qualified educational expense. Additionally, these 529 Savings Plans allow for tax-free withdrawals up to $10,000 each year for each of your beneficiaries.
Qualified expenses under the 529 College Savings Plan include.
Supplies and books
Room and board
Computers and additional technology
Want to Open an Account?
Speak with a Retirement Advisor at National educational services
Understanding the different retirement account options that are available to you as an educator can be difficult. Leave it to the experts to help you know which plan is right for your personal retirement goals.
Contact an advisor at National Educational Services today to get started saving for your future.