What you need to Know about IRA’s
An individual retirement account or IRA is a vehicle set up to help you reach your retirement goals. It is never a good idea to have all of your finances in one place, so the Internal Revenue Service (IRS) set up the IRA with similar tax benefits as a 401(k) that you may have at work. It's a good idea to have both a 401(k) and an IRA to remain diversified and protected. Setting an up an IRA is easy when you have the facts listed below and the help of the attorneys at Robinson, Seiler & Anderson in Provo.
Be Aware of the Limits
The IRS allows you to deposit up to $5,000 per year if you're under the age of 50 and $6,000 per year if you're over 50. You must also have earned income to contribute to an IRA, but that could include a spouse if you're married. Meeting with your attorney annually can help you to be aware of any changes to your IRA limits and how you can benefit the most from it.
There are Two Types of IRA’s
There are two types of IRA’s; Traditional IRA’s and ROTH IRA’s. A traditional IRA doesn't require that you pay taxes on your gains until you start taking distributions. (Distribution is the term used to describe the withdrawals you make once you reach retirement age.) The traditional IRA keeps more money in your account over time and that allows the money to compound at a faster rate. The Roth IRA requires that you pay taxes now, at your current rate, because the money you're contributing was already taxed before you received your check. This allows your earnings to grow tax fee, and if you anticipate being in a higher tax bracket in the future.
The Costs Involved
In order to open an IRA, you'll need a bank or investment broker. Some of the discount brokers offer no-fee IRAs other than the commissions charged to buy and sell within the account. Other brokers will charge a yearly management fee even if they aren't managing the account for you. Look for a no fee IRA. This will help you in getting the most out of your money over time.
IRA’s don’t have to be confusing when you have the help of the attorneys at Robinson, Seiler & Anderson in Provo. For more information on the set up of IRA’s and what you should do regarding your specific situation, call and schedule a consult with us today.