401k And IRA

Are you on the verge of retirement? Do you wish to secure your future post retirement life? If yes, then you must seriously think about having retirement savings accounts.

RSA or a retirement savings account is basically an account that's offered by banks, credit unions, building societies, life insurance companies, besides approved financial institutions. It is used for the purpose of retirement savings and is like superannuation funds.

RSA’s usually contain capital guarantees. This means that contributions (besides interest on the accounts) can only be reduced by fees and account charges. RSAs are fully moveable. This means that the balance of the account can be sent to another RSA at one's request.

Commonwealth Bank of Australia, Savings and Loans Credit Union (SA) Ltd., Queensland Police Credit Union Limited, Queensland Country Credit Union, Hunter United Employees' Credit Union Ltd., QANTAS Staff Credit Union Limited are some of the leading players in the business.

Do you really need a PRSA?

If you are contemplating investing in a PRSA or are weighing up your choices, you must ask yourself these questions:

Is there a pension plan for me at my job? If not, you should contemplate making provisions for your retirement, and a PRSA may be the choice for you. In case one already has an excellent pension arrangement, s/he may not require making any additional provisions, or you may be able to "top up" your benefits through making Additional Voluntary Contributions (AVC’s). In case there does not exist any AVC facility at your disposal, the responsibility might fall on your employer to give you access to PRSA.

Should I start a PRSA in case I already have a personal pension plan? You must go for professional advice on the basis of your own personal situations. For more information, get in touch with a broker or your pension provider.

Do I need a PRSA in case I already have a defined benefit plan? Defined benefit pension plans make a promise: a pension that's closely related to your salary. So you may not require making any further pension provisions. Making a transfer from a defined benefit plan into a PRSA comes with a risk: so take a stock of your financial position and weigh up the advantages/disadvantages of switching.

Do I need a PRSA if I have a defined contribution plan? In this case, you are already carrying the investment risk. Your pension will depend on the contributions that you make, along with your fund's investment performance, less any costs involved. In case your employer is making a contribution to your existing plan, you must discover if this will continue in case you transfer to a PRSA.

To know if you really need to have retirement savings accounts, find out the answers to these questions first, they will lead you in the right direction.

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