No doubt you've heard that Individual Retirement Accounts (IRAs) are a great 2-for-1 deal. Not only do they help you accelerate your savings, but they offer major tax benefits. But the two most popular IRAs - Traditional and Roth - offer those tax breaks in very different ways. The Wealth Management team can help walk you through the key differences and help you choose an appropriate investment strategy.
Traditional IRA
- Contribute up to $7,000 per year (up to $8,000 if age 50 and over).
- Enjoy possible tax deductions each year a contribution is made.
- Withdraw funds without penalty beginning at age 59-1/2.
- Pay taxes when money is withdrawn from account.
Roth IRA
- Contribute up to $7,000 per year (up to $8,000 if you're age 50 or older).
- No deduction for annual contributions.
- Withdraw funds tax-free, beginning at age 59-1/2.
- Make use of funds for higher education and housing purchases, in some instances.
Rollover IRA
- Move assets from an administered retirement plan, typically from an employer.
- Open or contribute to IRAs when you change jobs or receive a distribution from an employer's retirement plan.
- Take advantage of benefits offered by many Rollover IRAs, including more investment choices and lower fees than a 401(k) or similar account.
- Enjoy tax-free earnings growth, but pay taxes on withdrawals.
- Continue with your current 401(k) provider and existing financial plan, or consider other options including various rollovers.
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