June 11, 2020

TAGGED AS: Retirement Planning

An Individual Retirement Account (IRA) is an investment account specifically for saving money for retirement. An IRA can be an important part of the retirement planning process and may offer tax benefits.

If you've been considering contributing to an IRA, here are a few things to consider: 

  1. You want a tax benefit now. The traditional IRA typically offers a Federal tax benefit now by contributing up to a certain amount each year on a tax-deferred basis, so you don’t pay taxes until the amount is distributed or withdrawn. Your taxable income is reduced by your contribution amount. Income and contribution limits apply.
  2. You want a tax benefit later. The Roth IRA offers tax-free earnings at retirement. Although not tax-deductible at the time of contribution, your earnings accumulate tax-free and remain tax-free at withdraw. Income and contribution limits apply.
  3. Your employer doesn’t offer a 401(k). Retirement planning shouldn’t be put off if your employer doesn’t offer a 401(k). Like a 401(k), opening a traditional IRA also lets you contribute pre-tax dollars to your retirement, up to the IRA annual limit. Plus, an IRA gives you the added benefit of investing in nearly anything you’d like, without the limitations of an employer’s options.
  4. You’re self-employed. If you run a business or you earn self-employment income, you can contribute to a SEP or Simple IRA. Like a traditional IRA, contributions are made with pre-tax money. You can also offer this option to employees.
  5. You want a comfortable retirement. Even if you’re not eligible for tax-deductible contributions, say you’re over the income limit or you’ve already maxed out an employer-sponsored 401(k), making IRA contributions can still help you plan for your retirement.
  6. Your employment situation has changed. If you have a 401(k) from a former employer, you likely aren’t able to add to it. Rolling it over into an IRA can give you more control and allow you to make contributions again. 

WANT MORE?

Visit our Retirement Central website for planning tools, educational articles, and to open your IRA today. You are also welcome to give us a call or stop by a branch and we can help you get started.   

Visit Retirement Central Now Schedule an Appointment

 

1st United Credit Union cannot give tax advice. Please consult your tax advisor or visit IRS.gov.