ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Workers and their spouses do not need their employers’ help to save in tax-favored retirement accounts. They may open individual retirement accounts, which mostly come in two forms: traditional IRAs and Roth IRAs.

Detailed explanation-2: -SIMPLE IRA, which stands for Savings Incentive Match Plan for Employees Individual Retirement Accounts, is employer-sponsored. This means it is offered to employees through a business. These types of retirement plans are made specifically for small businesses with 100 or fewer employees.

Detailed explanation-3: -The only difference between the two types of 401(k) accounts is the tax treatment. Contributions to traditional IRAs are deductible in the year you make them, but taxable when withdrawals are made. Contributions to Roth IRAs are not deductible when you make them, but withdrawals are not taxed.

Detailed explanation-4: -The three main types of IRAs are traditional IRAs, Roth IRAs and rollover IRAs. Traditional IRAs are funded with pretax dollars, while Roth IRA contributions are made after taxes. A rollover IRA is an IRA funded with money from a former employer-sponsored 401(k) that doesn’t incur early withdrawal penalties.