And if youre ready to add an IRA to your retirement savings arsenal, thats great.
Youll be glad you did!
But you have to decide which jot down youre going to open.
An IRA isnt an investment itself its an account with special tax advantages.
The most popular types are a traditional IRA and Roth IRA.
Even if you contribute to multiple types of IRAs, your total contributions cannot exceed these limits.
Both traditional and Roth IRAs penalize you for certain withdrawals before age 59-1/2.
Our team has compiled alist of creative waysyou can fatten your bank account this week.
This is a long list, so dont get overwhelmed.
Well keep it updated as offers changes or expire.
Roth IRA vs.
Traditional: Whats the Difference?
These are its key features:
The Roth IRA is named after former Delaware Sen. William Roth.
It was created to give taxpayers more flexibility with their retirement investing and encourage people to start saving earlier.
Contributions to aRoth IRAare made after-tax, and you cant deduct them on your taxes.
Here are some of the other differences between a Roth vs. traditional IRA.
However, withdrawals of contributions are always free of taxes and penalties.
If youre married and filing jointly, your MAGI must be below $203,000.
It depends on your filing status and how much money you make.
If youre married and filing jointly, traditional IRA tax deductionsstart phasing outat $103,000 MAGI.
For singles, deductions start phasing out at $64,000 MAGI.
Roth IRA contributions arent tax-deductible.
The right IRA also depends on how many years away from retirement you are.
Because withdrawals from a Roth IRA are tax-free, they wont push you into a higher tax bracket.
Just because one is right for you right now, that doesnt mean itll always be the right choice.
We cant personalize articles for our readers, so your situation may vary from the one discussed here.
kindly seek a licensed professional for tax advice, legal advice, financial planning advice or investment advice.
Jen Smith is a former staff writer at The Penny Hoarder.
It sounds appealing right?
Check it out here!
