To analyze: The importance of the terms: pension plans, Keogh plan, individual retirement account, Roth IRA, diversification.
Explanation of Solution
Pension plans - Pension schemes act as a means of financial stability and post-retirement security. It is an insurance scheme offering financial compensation for the elderly that is funded by a business fund.
Keogh plan - The Keogh plan may be set up as either a defined-benefit or a defined-contribution plan, but most programmes are defined as a defined contribution. Contributions are typically tax-deductible up to a certain percentage of annual income, with applicable absolute limitations in U.S. dollar terms, which the Internal Revenue Service (IRS) may differ from year to year.
Individual retirements account (IRA) - The IRA is an account developed at a financial institution that allows a person to save for retirement on a tax-free or tax-deferred basis.
Roth IRA - The Roth IRA is an individual retirement account (IRA) that allows for eligible withdrawals on a tax-free base provided that certain criteria are fulfilled. Roth IRAs are supported with post-tax dollars; the donations are not tax-deductible. But if anyone starts withdrawing cash, the money is tax-free.
Diversification - Diversification is a strategy that reduces risk through the distribution of assets between different financial instruments, enterprises and other categories. It aims to optimize
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