No matter how near or far off your retirement is, the tax advantages of an Individual Retirement Account can be too great to pass up. Using both an IRA and an employer-sponsored plan (such as a 401(k) if you have access to one) provides the opportunity to invest more for your retirement.
There are two common types of IRAs available to individuals—the Traditional IRA and the Roth IRA.
If you can wait until you’re 59½ or older to withdraw, you’ll likely avoid taxes and penalties.
Contributions to a Traditional IRA may be tax-deductible depending on your income, your tax filing status and whether or not you’re covered by an employer-sponsored retirement plan like a 401(k). The key benefit of a Traditional IRA is the annual tax benefits during your earning years.
If you’ve earned income below a certain threshold set by the IRS, a Roth IRA may be right for you.
Contributions to a Roth IRA are not tax-deductible. The key benefit of a Roth IRA is that qualified withdrawals (made after retirement) are tax-free depending on the age of the account owner and length of time the account has been in place.
Contact us today to discuss your IRA options.