Retirement plan providers have begun to allow exchange traded funds (ETFs) into a mutual fund-dominated area of investing. While ETFs have lower fees, allow for diversification and can be easily traded, there are other points to consider with a retirement account. Retirement plans that are tax-deferred tend to trade infrequently and assets are taxed as ordinary income despite which assets were held. On the other hand, Roth IRA or 401(k) plans can accumulate assets tax free. But fiduciary must be considered, such as diversification standards, and investment education requirements reports Denise Appleby for Investopedia.com.
It is important to carefully consider which plan is right for you, in fact, it might be necessary to work with a financial planner to ensure your chosen plan will meet your needs. Consideration of how fees affect your net value are also crucial.
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