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Is The IRA For You?

Individual retirement accounts (IRAs) can provide individuals with opportunities to save for retirement while providing various tax advantages. There are two main types of IRAs, 1) Roth IRA, and 2) Traditional IRA. In accordance with IRS rules, traditional IRAs allow individuals to make contributions from “pre-tax” dollars, and are therefore tax-deductible. Contributions and the money that you earn can be withdrawn free of the additional 10% additional federal income tax at or after age 59 ½. Further, all of the earnings are not given any tax until they are withdrawn after turning age 59 ½, at which time they are taxed at the individual’s current rate. Roth IRA contributions on the other hand are made with “post-tax” dollars, and therefore are not tax-deductible. Further, any earnings are tax free if withdrawn at or after age 59 ½ and the account has been open for five years or more. The benefit of IRAs are that virtually anyone is eligible. For traditional IRAs, anyone under the age of 70 ½ who has earned income equal to or greater than their IRA contribution amount is eligible, while anyone, regardless of age is eligible for your Roth IRA pending that their modified adjusted gross income does not exceed certain thresholds. Both traditional and Roth IRAs have annual contribution limits in accordance with IRS rules. Check out gold in ira for more information.

Both traditional and Roth IRA offer unique benefits based on their taxing structure. All other variables considered equal, traditional IRAs and gold ira rollover maximum benefit is experienced if the individual believes that their tax bracket will be lower at the time of their retirement, while Roth IRAs maximum benefit is experienced if the individual believes their tax bracket will be higher at the time of their retirement. Further, the Roth IRA allows individuals to avoid further taxation on investments earnings. For example, an individual with $500 of fixed income securities in a brokerage account that earns $50 annually (10% yield) will have those earnings subject to taxation, whereas that same investment yielding the same income in an Roth IRA will not be subject to income taxation. This tax management aspect is one of the many benefits of managing for retirement.

The IRA is simply a great product to have when it is time to think seriously about your retirement. Do not take this task lightly, and make sure that you are resigning just the way that you want to retire –comfortably. The IRA Will make it happen.