IRAs–What You Need to Know

Saving for retirement is one of those problems that everyone seems to worry about, yet put off for too long at the same time. As anyone can tell you, the sooner you start saving, the happier you’ll be in the long run.

 

Choosing the right retirement account for you can be intimidating, no doubt. While most people leave the headaches to their employers who handle the mess for them, it will better serve you to educate yourself on other viable options. One of those options we’ll discuss in-depth today is IRAs or Individual Retirement Accounts.

 

The two types of IRAs most people are familiar with are traditional IRAs and Roth IRAs. Traditional IRAs provide tax-deferral benefits, whereas Roth IRAs provide tax exemption benefits. The reason Roth IRAs enjoy tax exemption status is that they are generally geared towards lower-income brackets. You need to meet specific income requirements to open a Roth IRA.

 

Any money put into a traditional IRA is tax-deductible. Moreover, all taxes on savings put into traditional IRAs are deferred until the first withdrawal upon retirement. Savings put into Roth IRAs, on the other hand, will never be taxed again, because you contribute after-tax dollars.

 

The benefits of these IRAs don’t stop here, though; read on to learn more about which IRA can help you build the nest egg of your dreams.

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Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

(email) ken@stltest.net

(website and blog) https://www.accountingaccidentally.com/