IRA - Individual Retirement Account
What is an IRA?
An Individual Retirement Arrangement (IRA), commonly called an Individual Retirement Account, is one of the most effective ways to accumulate retirement savings, with built in tax advantages. This allows your account to compound at a faster rate than a regular investment.
Different Types of IRA’s
- Traditional IRA
A Traditional IRA is a valuable financial account to help you plan and enjoy your retirement goals. Contributions grow tax-deferred until withdrawn. For many investors, traditional IRA contributions are tax-deductible.
- Roth IRA
In a Roth IRA, contributions are not tax-deductible however your earnings grow tax- free and distributions are tax-free at retirement age.
- Rollover IRA
A Rollover IRA is established when you retire or change jobs, and you transfer (rollover) your 401K or other qualified plans into an IRA for yourself.
Simplified Employee Pension Plan is an IRA for the self-employed or a small business owner. This is a powerful way for a self-employed individual to contribute to an IRA that grows tax-deferred while utilizing tax-deductible contributions.
- Simple IRA
Simple IRAs are ideal for the self-employed and for small business with 100 or fewer employees. This plan is easy to set up and maintain, with minimal administrative requirements and fees.
When to Consider an IRA
You should consider investing in an IRA if:
- Your employer or your spouse’s employer does not offer a qualified plan such as a (401K, 403b, Simple IRA, or a profit sharing or pension plan)
- You are retiring and/or changing jobs and need to move your 401K or qualified retirement plan from your employer to your own IRA.
- Currently you are maximizing your contributions to your employer-sponsored plan and would like to save more.
- You are looking for tax-free growth and withdrawals on your retirement investments and want to be able to make contributions after age 70 ½, or think you might be in a high tax bracket when you retire and are looking for tax savings in the future versus now.(Roth IRA)
- You are currently self-employed and are looking for a powerful tool to reduce your current tax liability and desire tax-deferred growth of investments and dividends. (Sep-IRA)