What are different type of retirement account?
It includes cash balance pension plans, profit sharing plans, 401(k) plans, 403(b) plans, employee stock ownership (ESOP) plans, simplified employee pension (SEP) plans, and SIMPLE IRA/401(k) plans.
Pros:
Withdrawals from Roth IRAs are tax free, provided the owner is at least 59½ years old and has owned the account for five years or more. They also are not subject to the minimum distribution rules, and Roth assets can be passed to heirs tax free. Withdrawals can be spread out over their lifetimes, which will give their inheritance additional years to grow, tax free. By tapping into Roth IRAs and municipal bonds last, a person will get the most tax-free income.
Cons;
Most distributions from qualified retirement plans or IRAs to an individual who has not yet reached age 59½ are considered premature distributions and are subject to a 10 percent early withdrawal penalty tax. For example, let’s say that Chris, age 50, withdraws $10,000 from his 401(k) plan to buy a boat. Assuming the entire withdrawal is taxable, he must pay a penalty tax of $1,000. He must also include the $10,000 distribution in his income for the year and pay tax on that as well.