Types of Investment Accounts

Learning the best way of investing your money to secure your retirement can be very difficult. One reason is because of the multitude of varying types of accounts. For those who have not secured their retirement plan through their employer, there are IRAs that offer them a good way to compound their long term retirement savings.

From business owners to married couples and individuals, there are numerous IRA options that can be beneficial to reaching their retirement goals. Since you are reading this page, the odds are good that you are looking into investing in precious metals like physical gold within your own retirement account. Because every retirement account will be different depending on each specific situation, try to select yours out of this following list –

Traditional IRA

This type of IRA does not incur taxes on any contributions until you actually withdraw the funds when you reach 70 ½ years of age. Because this account is tax-deferred, the interest and the investments accumulate much faster than retirement accounts that are taxable. Traditional IRA contributions are also tax-deductible (providing you are not enrolled in some type of separate plan via your employer). For single people, their maximum annual contribution is $5,000. For married couples it is $10,000. Traditional IRAs can be opened through a broker or a bank.

Roth IRA

This IRA that differs from the traditional IRA in that it provides you with tax-free income whenever you withdraw the money at age 59 1/2. The contributions, however, in your Roth IRA, are not tax deductible as they are with the traditional IRA. You can also use a Roth IRA for investing in mutual funds, stocks, certificates of deposits, and money market accounts. This tax-free characteristic gives the Roth IRA quite an advantage over the traditional IRA. Even though it lacks that annual tax deduction, a person can still save thousands on taxes whenever they withdraw their money at retirement time.

Rollover IRA

This IRA allows you to funnel your money from your existing IRA plan, 401(k), or 401(b). If a person no longer works for their employer, but they hold money within their 401(k) plan, they can still open up a rollover IRA and move their money into their new account. There is NO LIMIT on Rollover IRA contributions, which allows people to transfer however much money they want from their employee-sponsored IRA account. These retirement accounts can be set up through a brokerage firm or a bank.

Spousal IRA

Stay at home moms can open up an IRA of their own, and allow a working spouse to fund their account. That is known as a ‘spousal IRA’. This type of retirement account (in spite of the term used to describe it), is nothing more than a simple ordinary Roth IRA or the traditional IRA. The idea here is that non-working spouses should be given the freedom to establish some retirement savings of their own. IRAs may not be jointly-owned, however, once the money has been deposited into that IRA, it rightfully becomes the property of that specific account holder. That means if the couples get divorced, the stay at home moms can keep their money. An added advantage to these types of retirement accounts is that married couples are able to contribute as much as $10,000 each year.


This one is quite similar to your traditional IRA. The difference is, it has been designed for benefiting small business owners and those who are self-employed. You can qualify to open up a SEP IRA regardless of whether you are a corporation, LLC, or sole proprietor. In a typical SEP IRA set up, the earnings are tax-deferred while the contributions are tax-deductible. People can contribute as high as $50,000 a year, but they cannot withdraw the money prior to reaching age 59 ½, unless they pay a 10% penalty to the IRS. The tax-deduction part of a SEP IRA is its main advantage. When tax time rolls around and it turns out a person’s business income was more than they expected, they can simply make a large contribution into their SEP IRA, and it will substantially lower their income taxes for that year.


A Salary Reduction Simplified Employee Pension Plan (SARSEP) is a small business retirement vehicle made available only for businesses having 25 or fewer employees. It was discontinued back in 1996. Under the SARSEP, the employees had an individual SEP IRA established under their own names. Both the account holder and their employer were allowed to make contributions. Those contributions were pre-taxed via salary reductions. The employer’s contribution could not exceed 25% of that employee’s salary or $52,000, whichever was less. The employee contributions were dependent on the salary reduction agreements laid down within the plan. The could not exceed $17,500. In addition to this, all the contribution were limited by net profits. To put it simply, SARSEP is merely a variety of SEP IRAs, and these individual employee accounts function by SEP IRA rules.


A Savings Incentive Match Plan for Employees (SIMPLE) is the term for this tax-deferred and employer-provided retirement savings vehicle. A SIMPLE IRA has a design that encourages smaller employers (those with 100 or less employees), to provide their workers with retirement plans, while at the same time avoiding all the complicated set up processes of the larger benefits packages. One of the main benefits of these IRAs is they don’t fall under the ERISA guidelines. Employers who do offer these SIMPLE IRAs must provide certain minimum contributions to the accounts of their employees. Those employees who choose to participate are basically opening up a traditional IRA of their own via their employer. A major drawback to this is that the contribution limits are fairly low (the 2014 limit was set at $12,000). Another slight drawback to SIMPLE IRAs is they’re more difficult and also have a waiting period before being initiated.

401(k) Plan

This type of plan as we know it today was not consciously constructed by the IRS or the U.S. Government. It was the brainchild of a benefits consultant named Ted Benna. It was named for a section of the Internal Revenue Code (section 401(k)), added in back in 1978. It was Benna who realized this sort of plan could use this provision to create simpler employee retirement plans that also carried tax advantages. In today’s world around 95% of all private employers offer 401(k)s as an option within their benefits packages. These are defined contribution plans that are mainly funded via employee pre-tax salary deductions. One of its most important benefits is in possible having employer match programs. This enables investors to not only receive free contributions, but to exceed the standard contribution limits as well. A person is prohibited from investing in numerous asset classes via 401(k)s. That includes precious metals and real estate. The large majority of all 401(k) monies are placed into mutual funds.

403(b) Plan

This one was named for Section 403(b) found in the Internal Revenue Code. These plans are defined contribution plans with tax advantages. They are available for certain non-profit organizations that are tax-exempt, some church ministers, and some public school employees. Similar to the 401(k), the employees who participate in these 403(b) plans can defer money from paychecks into their retirement investment accounts. These 403(b)s function very much like a 401(k) in many ways. Each plan has both a provider and an administrator. The available investment options for participants are limited to whatever their particular plan offers. There was a time when these plans were known as ‘Tax Sheltered Annuities’. This was because when they were set up initially they only offered annuities as a sole investment choice.

457(b) Plan

This name also came out of its own section of the Internal Revenue Code. Many times it is referred to as just the ‘457 plan’. It is quite similar to other tax-deferred plans that are employer-sponsored (like 403(b)s and 401(k) plans). It’s a defined contribution plan where participants have income deducted from their paychecks and set aside in their own tax-free investment account. The plans were created to be alternatives in regard to defined contribution plans, aimed at 2 particular employer types, which are tax-exempt non-government employers and government employers (charities/hospitals). Different rules exist for non-governmental and governmental 457 plans. The main difference is the fact that public government 457s have to be employer funded, while nearly all non-governmental 457s do not. The latter does not because to do so would remove any tax benefits for that account as per the ERISA guidelines.

Thrift Savings Plan (TSP)

This is a uniquely defined contribution plan. It’s only available to members of the military or to federal employees. The TSP is 1 of 3 parts of the FERS retirement packages, as well as Social Security and the FERS annuities. Congress has established that TSPs are an alternative option for public workers to the common 401(k) style accounts. TSPs consist of 10 investment funds covering 6 categories (C,F, G, I, L, S). Each one is basically a mutual fund portfolio based and organized on various risk levels. You can’t hold individual securities with a TSP.

Solo 401(k) Plan

This plan was introduced in 2001 as part of the well-known ‘Economic Growth & Tax Relief Reconciliation Act’. They were actually the very 1st employer-sponsored retirement accounts that were specially designed and aimed at workers who were self-employed. These workers were formerly relegated to only utilizing Keogh Plans, IRAs, or Profit Sharing Plans. These Solo 401(k)s have nearly all the same requirements and rules of the normal plans, but they have 2 notable exceptions:

(1). The owner/employer along with his/her business aren’t subject to all the costly and complex ERISA guidelines.

(2). There can’t be any other company employees that are considered ‘full-time’, which computes to 1,000 plus hours a year.

Employee Stock Ownership Plan (ESOP)

ESOPs involve an employer setting up a trust fund. This fund has to designate the cash for purchasing existing shares of stock or share its own. In the U.S. an ESOP is one of the most common methods to enabling employees to become a part-owner of their own company. ESOP shares are allocated into specific employee accounts. However, the formulas governing these share allocations can differ from one company to the next. As it is with other benefits that are employer-sponsored, the employees are not usually fully vested in their ESOPs until they reach a certain level of seniority. This type of account carries tax benefits –

  1. For the Company issuing the Stock, contributions are tax-deductible.
  2. Employees pay absolutely ‘no’ taxes on any received contributions. They can also rollover distributions into their own IRA or any other plan that qualifies.

Keogh Plan

This type of plan was established back in 1962. It was pushed by Representative Eugene Keogh. It’s a pension plan, tax-advantaged, specifically designed to work for unincorporated business entities and workers who are self-employed. However, not everyone who is self-employed may establish their own Keogh Plan. An Independent contractor, for example, can’t open their own Keogh. These plans are only available for individuals who are self-employed who have opened an unincorporated business. A Keogh plan comes with both defined benefits and defined contribution varieties. They are notoriously famous for the complicated paperwork involved. However, they still remain as a viable option, mainly for self-employed workers who are high earners. When a person establishes a Keogh plan, it does not inhibit their ability to contribute to their own IRA.

Money Purchase Plans

A money purchase plan is a retirement vehicle that some for-profit companies offer. With these contributions are made by employees and employer alike, and they are based on annual earnings percentages. Unlike the common Profit Sharing Plans where the contributions are tied up with employer profitability annually, the percentage of the yearly earnings devoted to a Money Purchase Plan stay the same every year based on what the terms of the plan state.

Profit Sharing Plan

Employers set these up to give employees an additional type of compensation. It enables them to share in company earnings with other participating employees via a trustee. If a person has a Profit Sharing Plan their employer makes contributions to their account. These contributions are invested and may grow tax-free. Similar to other employer-sponsored retirement plans, people employees are not usually considered to be fully vested until quite a few years into their plan.

Plan Type Sponsorship 2018 Contribution Limit Roth Option? Allow Gold Stocks? Allow Gold ETFs? Allow Gold Bullion
401(k) Private Employer $18,500 / $55,000 Yes Maybe Maybe No
Solo 401(k) Self-employed $18,500 / $55,000 Yes Yes Yes Yes
Keogh Plan Self-employed or Unincorporated Employer $55,000 No Maybe Maybe No
403(b) Government or Non-profit Employer $18,500 / $55,000 Yes Maybe Maybe No
457(b) Government or Tax-exempt Employer $18,500 / $55,000 Yes Maybe Maybe No
Simple IRA Private Employer $12,500 / $55,000 Yes Yes Yes Maybe
SEP IRA Business Owners & Self-employed $55,000 Yes Yes Yes Maybe
Profit Sharing Plan Private Employer $55,000 No Maybe No No
Money Purchase Plan Private Employer $55,000 No Maybe Maybe No
Annuity Individual None No Maybe Maybe No
ESOP Private Employer Varies Yes Maybe No No
SARSEP Private Employer $55,000 No Yes Yes Maybe
Self Directed IRA Individual $5,500 / $6,500 Yes Yes Yes Yes
Traditional IRA Individual $5,500 / $6,500 Yes Yes Yes No
Precious Metals IRA Individual $5,500 / $6,500 Yes Yes Yes Yes
Thrift Savings Plan (TSP) Government or Military $5,500 No No No No
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