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403(b) Tax-Deferred Annuities: This plan works like a 401(k) but participation is limited to nonprofit organizations such as schools, hospitals, and churches.
Keogh Plans: These plans are designed for self-employed workers and their employees. There is an annual limit to contributions and also to the total amount of contribution.
Small Business Plans: The Simplified Employee Pension (SEP) and the Savings Incentive Match for Employees of Small Employers (SIMPLE) are designed for small businesses that do not have other plans available to them. For information about these plans, visit the Department of Labor website at www.dol.gov.
Annuities: This account is a contract you make with an insurance company. Your contribution can be in one lump sum or in a series of payments. The contract guarantees that payments will be made to you for life or over a specific time period depending on the type of annuity you hold. Annuity returns can be fixed, variable, or equity indexed. Talk with a financial advisor to see if an annuity is suitable for you.
The All-important 401(k)
Alarmed by the drop from 7.9 percent of Americans who saved a por- tion of their income over the 1959-2001 period to an average of only 1.6 percent in 2001 (Bureau of Economic Analysis, www.bea.doc.gov), the Department of Labor has turned the tide by encouraging those companies with 401(k) plans to enroll their employees automatically. On average, Americans with access to a 401(k) saved 7% of their salary in 2011. However there is room for improvement since experts recom- mend saving 10 to 15%.
Where Should I Save My Money?