In last Friday's post, we discussed a few of the most common company-sponsored retirement plans.  In today's post, we'll discuss a few individual retirement plan options available to most in the workforce.  In this way, hopefully last week's question from a reader will be answered.

A, Part II: It's wise to participate in most companies' pre-tax employment plans.  It can significantly reduce your tax burden now while helping to provide for your well-being later in life.

But company-sponsored retirement plans like 401(k), 457 and 403(b) aren't the only ways to effectively provide for your retirement. After consulting with your financial adviser(s), you may elect to use individual retirement plans in conjunction with - or as a replacement of - retirement plans from your company.  Here are a few of the most individual retirement plans:

IRA.  Short for "Individual Retirement Account," IRA's allow $2000 to be saved annually by individuals (although that figure will rise to $5000 by 2008).  IRA's are similar to most company-sponsored retirement plans in that the money you invest in an IRA every year earns you a tax break.  Of course, an IRA is different from retirement plans from your employer(s) insofar as you have to invest the funds on your own.  The disbursements during retirement (which you can start taking after 55 1/2 years of age and must start taking by 70 1/2 years of age), then are taxed.  For more basics in IRA accounts, read this.

Roth IRA.  Roth IRA's are different than either the standard IRA (above) and company-sponsored retirement plans in that you invest after-tax money.  That is to say, you don't get a tax deduction during the years you invest.  The benefit, here, though, is that your retirement disbursements from Roth IRA plans are tax-free (including interest!). To learn more about Roth IRA accounts, read this.

IN THE CARAVAN:  Individual retirement plans are great ways to supplement - or replace - company sponsored retirements.  As always, consult with your financial adviser(s) before investing.

NEXT FRIDAY: Return of the Jerk

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Check out last Friday's first post on retirement plans.

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