Individual Retirement Account (IRA)
An IRA is your ticket to a secure financial future, allowing you to fund your retirement while your earning power is at its peak. Both Traditional and Roth IRAs offer excellent tax benefits, increasing their earning power even more. Any individual under age 70½ with earned income is eligible to open an IRA.
- Traditional IRA
- Interest earnings are tax deferred until withdrawal
- Current income grows tax-deferred until withdrawal
- Increases untaxed savings since withdrawals will be subject to lower tax bracket
- Contributions can be deducted on current tax returns
- FDIC insured
- Roth IRA
The big difference between Roth and traditional IRAs is when you pay the tax. With a Roth IRA, you cannot deduct contributions on your existing tax returns, but you avoid all taxes on your withdrawals once you retire.
- All earnings are non-taxable when held for five years
- Your income is taxed now, when you are not on a fixed retirement income
- Some early withdrawals are penalty-free for specific situations
- FDIC insured
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