WHILE THE STOCK MARKET continues to contain a lot of uncertainty, it is still prudent to open and contribute to a retirement account. If you are concerned about investing in equities, you could deposit your contribution into a very low-risk — or no-risk — account like a money market account. Investing in your retirement account makes sense for several reasons. It reduces your current year’s taxable income by the amount contributed to your retirement account. The earnings on your investment grow tax-deferred; you do not pay income tax on the contributions or earnings until you withdraw money. And you get into the habit of putting money aside which will grow to a much larger number when you reach retirement (potentially you will be in a lower tax bracket when you withdraw the money when retired).

Following is some background on a few of the different types of retirement accounts available.

If you are an employee of a company, you probably won’t have much choice in the type of retirement plan in which you can participate. If you work for a for-profit company, odds are it has created a 401(k) plan for employees. If it is a not-for-profit company, you can probably contribute to a 403 (b) plan. These plans are similar; they just have different names. The maximum a person can contribute to this type of plan in 2019 is $19,000; if you are 50 years old or older, you can make catch-up contributions of up to $6,000. It is always best to contribute as much to the retirement plan as the law or your employer allows. Also, if your employer makes a matching or annual contribution on your behalf, maximize the contribution you receive by contributing what you need to maximize your deduction.

If you are an employee and you don’t have the ability to contribute to an employer-sponsored plan, you can contribute to an individual retirement account, or IRA. Unfortunately, this retirement vehicle only allows for a maximum annual contribution of $6,000; however, it allows an additional $1,000 catch-up contribution for those 50 years of age and older.

Another type of retirement account is the SEP IRA, which stands for a Simplified Employee Pension, used primarily by the selfemployed or small-business owners. The maximum amount of the contribution for this type of account in 2019 is $56,000. However, this is further limited to 25 percent of the income your business reports.

A few other types of retirement accounts are available, but most contributions flow into one of the accounts referenced above.

Always speak with your professional tax advisor to make sure you do what is best for you.

The content of this article is for informational purposes only. It is not intended to be a substitute for professional financial advice. Always seek the expertise of a certified financial advisor or other qualified provider with any questions you may have regarding personal finance, investment and money-related issues.