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This is for the higher income earner who has already funded his/her Roth IRA (if eligible) and at least their 401k for the matching.

These retirement plans were conceived by the U.S. Congress--the same folks who brought us 906 pages of OwebamaKare, which bill's wheels are already falling off.

Pillars of OwebamaKare are crumbling

401(k) plans are not without their own flaws.

~ Limited flexibility: The plans offered by a large percentage of employers are noticeably short on options. Be sure that you have a good understanding of where the funds are being invested.

~ IRA deductibles excluded: Plan holders that contribute to their 401(k) can reduce--or possibly even eliminate--the income tax deductions allotted for an IRA.

~ Taxable income upon withdrawal: When a plan holder begins to withdraw money, it is taxed as additional income. There are also penalties for early withdrawal, with taxation up to 20% plus a 10% penalty if you withdraw before age 59 1/2.

~ Required withdrawals at age 70 1/2: Plan holders must being receiving distributions by age 70 1/2. If you're still working at that time, you may be subject to a higher tax rate than if you were retired.

~ Waiting periods: There is often a waiting period before employees can initiate a 401(k) plan with an employer, often times six months or up to one year.

Likewise, IRA accounts aren't flawless, either.

~ Limited contribution maximum: An IRA will allow the holder to deposit up to $5,000 if 49 years old or younger; or $6,000 if 50 or older.

~ Low contribution rate: IRAs have a low contribution rate. For those beginning an IRA retirement plan later in life, the contribution rate may not be enough.

~ Penalties for early withdrawal: As with the 401(k), there are penalties for early withdrawal.

~ Required withdrawals at age 70 1/2: Policyholders are also required to begin withdrawing money by 70 1/2 years of age.
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