Determine Investment Account Type

Quick Look

  • The account you make the extra investment in is completely up to you.
  • The likelihood of withdrawing funds (either contributions or earnings) prior to retirement may impact your choice of account (see “Limitations” column).
  • You could make the investment in a pre-tax retirement account (e.g. a 401k or IRA account), a post tax retirement account (e.g. a Roth IRA), or a standard investment account.

<< Make Additional Investments Checklist

When do you want to use the funds?

There are several considerations to make but the most important is that if you’re planning to take out your investment principal and/or earnings prior to retirement, you’ll have the most flexibility if you are using a standard investment account.

This is because retirement-specific investment accounts have tax advantages but lose elements of flexibility if you use the funds prior to a certain age, usually 59 ½ years old.

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