A 401k is a qualified retirement account sponsored by your employer. It allows you to divert a portion of your paycheck to the account, tax free. Your employer may allow a matching contribution and that varies from employer to employer.

Often you are given the flexibility to choose how the money contributed to the account is invested.

In the image to the left you can see a visual breakdown of some the pros and cons of a 401k.

Is a non-qualified retirement account but is governed by IRS regulations- just like a 401k.

Your contributions in a traditional IRA are tax-deductible up to 100%, but the annual allowable contribution to the account is caped and those caps are dictated by the IRS. In 2021, the maximum annual contribution was $6,000.00 for an individual and $10,000.00 for a married couple.

Just like with a 401k, your money is tax-deferred (you will pay taxes on the deductible contributions and investment gains) and just like with a 401k there are penalties for withdrawing the money before age 59 1/2.

With a Roth IRA, all your contributions (annual limits are the same as the traditional IRA limits) are after-tax money. This means that you have already paid taxes on the money earned and withdrawals will not be subject to further tax.

A Roth IRA also allows you to withdraw your contributions from the account without penalties. However, there are limitations on who can have a Roth IRA.

Indexed Universal Life can offer not just the benefit of traditional life insurance in the form of a death benefit, but life insurance has now evolved into a multi-purpose investment vehicle.

In addition to various riders that can be added to the policies and the living benefits advantages, more and more people are turning to indexed universal life as an investment strategy. These policies offer market protection from loss, with higher return potential by mirroring the movement of the market index- thus guaranteeing no money loss.

These policies are similar to Roth's in that the money you contribute to them has already been taxed, so the cash value being compounded can be distributed tax free. If using the account for retirement, the funds you take from the cash value are also not viewed as income -unlike the funds from your 401k, or IRAs. This means that you can't be penalized on your social security or Medicare premiums when withdrawing money from the account.