When planning for the future, it is important to take advantage of every tool possible — after all, setting aside money today is the best way to help ensure that tomorrow’s retirement is everything you want it to be.

Remember to consider the benefits of tax-advantaged accounts such as IRAs, 401(k)s, annuities and college-savings plans first. Then, take a look at the long-term investments that carry the lowest federal income tax burden on capital gains.

Here are just a few of the retirement-savings options that may be available to you.

Employer plan with a match — If your employer offers matching contributions to your retirement plan, be sure to contribute the maximum the employer is willing to match. Even if your employer only makes a partial match, you should still take advantage of this opportunity. It is additional money that can compound and grow.
Employer plan without a match — Even if your employer does not match your contributions to your company-sponsored retirement account, you should generally participate. Contributions and earnings within a qualified plan are not subject to federal income tax until withdrawn, which allows you to save money on a pre-tax basis.
Taxable investments — When setting aside money for retirement, you should first contribute to plans that offer tax advantages, such as employer-sponsored plans and IRAs. Once you have reached the contribution limits on those plans, you may consider taxable investments. The key is keeping your expenses down by:
- Taking advantage of lower federal income tax rates on long-term capital gains by holding stocks for more than 12 months.
- Choosing mutual funds with a lower annual turnover.
Annuities — An annuity is similar to a 401(k) or an IRA in that investment earnings are not taxable until withdrawn. However, with an annuity, there is no limit on how much you may contribute. Some investors use annuities to build tax-deferred earnings without intending to annuitize. Others buy annuities as personal pensions to provide a stream of guaranteed lifetime income.

Next: Options For Military Servicemembers

Updated Wednesday, January 27, 2010