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Diversify or be prepared to downsize your plans, said Lon Welsh, founder ofIronton Capital.
However, withdrawals are taxed as ordinary income.
Roth IRAs
Roth IRAs offer thesame contribution limitsas traditional IRAs, but flip the tax advantage.
You pay taxes now on the money you put in (with a Roth IRA), Welsh said.
Its like paying the tax bill upfront for tax-free income later.
At the same time, a Roth IRA benefits those anticipating higher, future tax rates.
Some believe Roth IRAs are always better, but that depends onfuture tax rates.
Designed for entrepreneurs, it works similarly to a traditional IRA, but with much higher contribution limits.
Up to $70,000 in 2025, depending on your income, Welch said.
Think of it as a supercharged IRA for the self-employed.
SEP IRAs allow for greater investment flexibility with potentially lower fees, he said.
They also work well for business owners seeking high contribution limits.
Health Savings Accounts
Health savings accounts (HSAs) can also serve as atax-advantaged retirement savingsbucket.
They allow individuals to set aside money pre-tax to pay for qualified medical expenses now and in the future.
Theyre often paired with a high-deductible health plan (HDHP).
HSAs offer a unique, triple tax advantage, Welch said.
You get tax-deductible contributions, tax-free growth and withdrawals for qualified medical costs.
Whats more, after 65, you could use it for anything.
For example, there are penalties for non-medical withdrawals before age 65.
Choosing the right option depends on your tax strategy and income level, Stroup said.
It may not be realistic if you find yourself having large medical bills.
Stroup said that a taxable brokerage account provides flexibility without contribution limits for high-income earners.
However, it is subject to capital gains taxes.
Withdrawals can be taxed at the lower capital gains rate if held at least a year.
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