IRA Investing Is Important No Matter What Your Age

It is important for adults of all ages to focus on getting ready to prepare for retirement financial security. Preparing for retirement is much simpler for those individuals that contribute to a Traditional IRA. Individuals have the ability to put back a little money at a time for their retirement.

Traditional IRA’s are an attractive retirement option and there are only a few simple eligibility requirements.

• Individuals who do not have a documented source of income, such as wages, bonuses or commissions cannot contribute to the retirement plan.
• If you are over the age of 70 1/2, you are no longer eligible to contribute.

It is important to remember that anyone who qualifies for a Traditional IRA also have the opportunity to take advantage of the great tax benefits. Contributions made directly to a Traditional IRA are tax deferred. To better understand the benefits, simply remember you do not have to pay taxes on the money you put into the retirement plan. Individuals who retire at 70 1/2 or sooner, are taxed once they start withdrawing their money. As individuals get older they generally fall to lower tax brackets and pay less taxes. You can deduct any money that you put into a Traditional IRA from your yearly income tax.

There are sanctions in place that limit the amount you can contribute and deduct each year.

• $5,000 is the maximum contribution for 49 and younger.

Participants that are age 50 and older can contribute a max of $6,000. In order for your Traditional IRA contributions to be counted as deductions for the year they must be received before the April 15 income tax deadline. Even contributions made the following year can be applied to your income tax if you beat the tax deadline.

• Each person should sit back and consider the benefits of investing a Traditional or Roth IRA or a 401k plan.
• Benefits such as the great tax deductions are effective immediately.
• Your income does not affect your participation in a Traditional IRA plan.
• Those individuals who expect to be in a lower tax bracket after retirement reap the benefit of paying fewer taxes on their money.

It is important to note that choosing the Traditional IRA plan over other alternatives can lead to some disadvantages.

• Unlike a Roth IRA a Traditional IRA’s penalize any individual under the age of 59 1/2 that withdraws their money.
• Some individuals have a retirement plan available at work and therefore are then subjected to eligibility requirements when they get ready to deduct their contributions.
• The IRS has the power to take part of your money if you have not started making withdrawals by 70 1/2. All contributors must begin to make regular withdrawals at 70 1/2 or they face penalties from the IRS.

The plan that fits one individual might not be the perfect retirement plan for you, so always compare each plan and choose the best one for you. You may decide to start a Traditional IRA or even split funds between it and a Roth IRA or 401k plan.

Confused about the differnce between Roth IRAs and traditional IRAs? To find out about Roth IRA rules, go to: Roth IRA Information.