After learning about the mutual fund concept of investing, another layer must be added to the story. Retirement savings plans are a must-do for everybody. Retirement savings plans include: IRA(Individual Retirement Account), 401(k), 403(b), SEP-IRA, (more).

You can apply everything you learned about the mutual fund because the mutual funds are often the investment vehicle offered in such retirement savings plans. The concept of a retirement savings plan is for you to participate in investments with little or no tax consequences on either your initial investment and/or your investment gains.

For example, an IRA is a retirement savings plan offered to everyone as far as I know. The basic rules are:

• $2000 annual contribution limit
• Contributions are taxed (the money from your wallet after the money has been taxed)
• All investment gains are never taxed if you withdraw the money after age 59 1/2

• $2000 annual contribution limit
• Contributions are not taxed (the money from your gross earnings is used)
• Investments gains are postponed until you withdraw the money after age 59 1/2

Because you are not paying taxes at various stages of the investment lifetime, you will grow a much larger money tree for retirement.

Another example is a 401(k) plan which is offered by employers to their employees. Some companies also contribute a particular dollar amount for each dollar you contribute. The basic rules for a 401K are:

• $10,500 annual contribution limit(in year 2000)
• Contributions are not taxed (the money from your gross earnings is used)

For more information on 401k's see the Fidelity 401k website. Check out their "About 401(k)'s" page.

Now that you're aware of these retirement methods, I'd like to comment on what you should be doing with them. This is rare, but straightforward material. It is rare because most professional advice will have a personal interest in one retirement investment method and not all combinations.

First of all, if your company offers a contribution match in it's retirement plan, at a minimum, you should/must contribute enough of your own dollars to get the maximum matching benefit from your company. Otherwise, you are missing out on free money. You wouldn't turn down lottery winnings, don't turn down benefits from your employer. They're probably screwing you elsewhere anyway, don't volunteer for more.

Retirement plans offered by your employer have various restrictions on them, including which investment vehicles you can pick. If, after you reach the contribution amount described above, you can afford to contribute more money towards your retirement, good on you, but it's time to choose an IRA next.

After you extract the maximum benefit from your employer, you should move your efforts to an IRA. This is because your investment vehicle choices are infinite and you have much more control of your money. You can purchase any mutual fund under an IRA. You can even purchase stocks under an IRA. In the past, when there was only a traditional IRA, this IRA possessed very similar tax-saving results to a, 401(k), for example. Now with the Roth IRA, the added benefit of tax-exempt gains usually surpass tax-deferred gains strategy for long-term investing. If you are nearing retirement, you should see a financial advisor to determine which of the Traditional or Roth IRA's is better for you, but any IRA is better than no IRA, so start something instead of letting the thought of seeing a financial advisor get in your way. The annual contribution limit for an IRA is $2000.