Questions:

• What is a qualified retirement plan?
• Why are 401(k) plans so popular?
• What is a Keogh plan?
• What does it mean to be "vested" in my retirement plan?
• Is an IRA a retirement plan?
• Can people who work for a company and own their own business have a retirement plan both at work and through their small business?
• Is my retirement plan protected from creditors?

Answer:

Is an IRA a retirement plan?

An IRA, or Individual Retirement Account, is indeed a retirement plan. However, it's not a qualified plan. Instead, IRAs are described in Section 408 of the Tax Code and have their own set of rules. One significant difference between qualified plans and IRAs is that qualified plans are established by businesses, while certain types of IRAs -- traditional or Roth IRAs -- are established by individuals. That means you can set up a traditional or Roth IRA for yourself, whether or not your employer has established a qualified plan for you at work.

Other types of IRAs, known as SEPs and SIMPLE IRAs, are for businesses and must be established by an employer. For example, the employer might be a corporation, a sole proprietor or a partnership. SEPs and SIMPLE IRAs permit larger tax deductions than do traditional or Roth IRAs.