Types of Accounts - Teaching Children About Money, Part 2

| November 13, 2018
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Last week I reviewed the priority of saving and listed several different types of accounts to save in. This week, I want to provide clarity around the types and common purpose of various accounts.

In general, there are three broad categories of investment accounts –

 

Tax-Deferred

Common Types – 401(k), IRA, 403(b), TSP, SEP IRA

Common Purposes –

  1. Saving for retirement goals.
  2. Deferring taxes in high income years.

Tax-Free

Common Types – Roth IRA, Roth 401(k)

Common Purposes –

  1. Saving for retirement goals.
  2. Saving after-tax during years of lower income.

 

Taxable

Types – Individual, Joint, Trust, TOD, UTMA

Common Purposes –

  1. Saving for intermediate term goals
  2. Extra saving after funding other accounts

 

Disclaimer: Alex Voorhees and Reston Wealth Management do not provide legal, accounting or tax advice. This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified investment, tax or legal advisor. The opinions voiced in this article are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) or strategies may be appropriate for you, consult your financial advisor prior to investing. No strategy assures success or protects against loss. You should consider the investment objectives, risks, charges and expenses of any investment carefully before investing.

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