You want to start saving for your retirement but you do not know where to begin. You want the easiest, most secure option and the sooner you start saving the better. Believe it or not, an individual retirement account (IRA) is probably going to be the best choice. IRA’s have several benefits. They are offered by most financial institutions. That means, you can go to the local bank you know and trust and let them manage your retirement money. Also, the tax advantages are incredible.
In a Traditional IRA, contributors have money deposited before taxes and the savings will not be taxed until it is withdrawn. Roth IRAs began in 1997 and are essentially the same except money is deposited after taxes and withdraws are tax-free. SEP IRAs are like company pensions that business contribute to, but in the individual’s name. SIMPLE (Savings Incentive Match Plan for Employees) require employees to match contributor’s deposits like a 401k but with small contributions. Lastly, Self-Directed IRAs allow the individual to make investments, rather than the financial institution.
All IRAs carry limitations with them. They can only be funded by cash and attempts to fund them otherwise will result in a loss of tax advantages. Individuals can only contribute $5,500 annually if they are under 50 and $6,500 if they are over. Tax deduction are reduced and eventually taken away after a certain income threshold based on filing status. To know more, just click http://www.ira-to-gold.com/.
Custodians of IRAs can use the money to purchase almost any securities with some restrictions, such as collectibles and life insurance. Also, securities cannot be purchased in the holder stand to gain financially from the purchase. Most custodians limit investments to stocks, bonds, and mutual funds.
Holders are able to withdraw and distribute funds without penalty after they turn 59 1/2. Non-Roth IRA holders must make withdraws monthly or face penalties after they turn 70 1/2. However, there are several exceptions to distribution rules.
In 2005, the U.S. Supreme Court ruled that IRAs are protected from bankruptcy up to $1,000,000. In many cases, IRAs are also protected from creditor seizure. Borrowing from an IRA is strictly prohibited except for a two-month window annually.
Recently, Americans have come under a retirement crisis as investments have performed substantially worse than expected. Many holders are left retiring with just $30,000 in their IRA accounts. Solutions are being worked out.