Investment accounts hold investments such as stocks, bonds or annuities. Accounts such as 401(k)s and IRAs are not investments themselves, but accounts that store investments, similar to how bank accounts hold cash.

There are several different types of investment accounts that are taxed differently. Some common account types are listed below.

Traditional IRA
IRA stands for Individual Retirement Arrangement, and is commonly referred to as an individual retirement account. The main feature of a traditional IRA is that taxes on any contributions or withdrawals are deferred until you begin withdrawing from the account in retirement. 

Roth IRA
Roth IRAs were introduced by Congress in 1997. A main feature of a Roth is that though you will pay tax on all contributions, you will pay no taxes on withdrawals once you begin withdrawing from the account in retirement. Both Roth and traditional IRAs can be opened by individuals in addition to, or in place of employer plans.

Employer Accounts
Employer-sponsored retirement plans may offer account types such as 401(k)s and 403(b)s. Though similar in tax treatment, employer-sponsored plans may have a more limited selection of investment products available than individual IRAs. Also, employees are typically responsible for choosing their own investments in an employer-sponsored account. 

Pension
An employee pension is a form of an annuity, which makes a guaranteed continuing payment. The payment amount can be based on several factors such as length of employment and salary. Pensions pay during the life of the payee or their eligible surviving spouse, and can not be passed on to any other beneficiaries. It may be a good idea for employees with pensions to additionally contribute to an investment retirement account through either an individual IRA or an employer-sponsored account.

Individual/Taxable
Individual investment accounts are often called taxable accounts, as all contributions and capital gains will be taxed in the year they occur. For some, an individual investment account in addition to a tax-advantaged retirement account may be a good option.

The financial profile of an individual or household can influence what investing account(s) may be best suited. Aesop Advisor LLC can make account type recommendations after reviewing a client's information.