Alternatives to 401(k)s

Between 2011 and 2012, employers dropped about 26,000 retirement plans.  If your employer decides to drop your 401(k), here are some alternatives.

First, consider a SIMPLE Plan, a boiled-down retirement plan for small businesses that can be cheaper to set up than a 401(k)-type plan.

Next, consider opening a Roth (401)k  (set up by an employer) or  a Roth IRA (set up yourself), both of which allow you to pull money out tax-free if you’ve been in the plan at least five years and are older than 59 ½.  Roths make sense if you’ll be staying in a high tax bracket in retirement or think taxes will increase in the future.

Finally, consider opening a simplified employee pension (SEP), which, like a SIMPLE, has few rules and an easy set-up. 

See John Wasik, What You Can Do If Your Employer Drops Your 401(k), Forbes, Dec. 9, 2013.