Individual Retirement Accounts (IRAs)

Get essential tips and guidance on managing IRA retirement accounts to secure your financial future effectively.

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Understanding Individual Retirement Accounts (IRAs)

An individual retirement account is an account in which individuals can deposit funds to save and grow their money for retirement. IRAs are one of several retirement account options that include 401ks and Roth IRAs. IRAs, sometimes referred to as traditional IRAs, allow you to make tax-free deposits now and pay taxes upon withdrawal down the line when you retirement. This a good way to go if you expect to be in a lower tax bracket upon retirement. Traditional IRAs require you to begin taking required minimum distributions at age 70 ½.

If your employer offers a 401k match, start with that. Next, compare IRAs with other options and choose your next step.

If you are a young adult, you might not be thinking about retirement. You might feel you have plenty of time to plan. But keep in mind that the years go by quickly, and before you know it, retirement will be right around the corner.

FAQ

Here are the answers to some of the most frequently asked IRA questions.

Whether you should go with an IRA or 401(k) depends on not only your retirement goals but also other factors such as your income and the benefits your employer offers. For example, you should always take advantage of an employer match for a 401(k), but an IRA is a good alternative option if you cannot get a retirement account through work.

Learn More: IRA vs. 401(k): Tips for Choosing the Best Retirement Plan

Opening a Roth IRA can be beneficial to you in retirement if you think you’ll be in a higher tax bracket when you retire. A limited amount of original contributions for a Roth IRA can be withdrawn tax and penalty free at any age.

Learn More: Dave Ramsey: Why a Roth IRA Is a Great Option

According to the IRS, traditional contributions you make to your IRA may be tax-deductible. However, there may be limitations involving your income level or the tax deduction only applying to you or your spouse covered by the same plan.

Learn More: Are IRA Contributions Tax Deductible?