Almost anyone with earned income can open an IRA. The hard part is deciding whether a Traditional IRA or a Roth IRA is the better choice for you.
Traditional IRA = Tax-Deferred Contributions and Earnings
Your contribution to a Traditional IRA may be tax deductible. Earnings on those contributions are tax deferred until you withdraw the money. That means both contributions and earnings can grow tax deferred until you retire. When you do begin making withdrawals (required at age 70 ½, although you can begin as early as age 59 ½), the money will be taxed at your ordinary income-tax rate.
Roth IRA = Tax-Free Earnings
Your contribution to a Roth IRA is not tax deductible, but all earnings are tax free. You can withdraw contributions without penalty at any time. Earnings can be withdrawn without penalty after five tax years following the first Roth contribution as long as you have reached age 59 ½. (other exceptions may apply)
Contributions
The contribution limits on IRAs are adjusted each year. The limit for the 2008 tax year is $5,000; it's $6,000 if you're 50 or older. Remember, though, you don't have to contribute the full amount to an IRA. In fact, through our automatic contribution program, you can fund a IRA with small automatic monthly contributions. So no matter where you're starting from, you can save and invest for your family's future financial security.
Let us help
Determining which IRA is right for you depends on your individual situation. I can answer your questions and give you the guidance to help you make that decision. Give me a call to learn more.
