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.
Start investing in your future. Learn what an IRA can do for you!
If you've been considering contributing to an IRA, here are a few things to consider:
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up to a certain amount each year on a tax-deferred basis, so you don’t pay taxes until the amount is distributed or withdrawn.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.
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.
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.
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.
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.
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.