Have You Started Thinking About IRA Investing?

Age should not be the determining factor when thinking about the future and making retirement plans. Preparing for retirement is much simpler for those individuals that contribute to a Traditional IRA. This IRA retirement plans give’s individuals the flexibility to save money slowly, in order to make sure they are prepared for their retirement future.

For those who meet the requirements, the Traditional IRA retirement plan can be a very worthwhile option.

• If you are not under the age of 70 1/2 by the end of the calendar year you no longer have the option to contribute to a Traditional IRA.
• Those individuals who do not have a source of income such as wages from a job or a set salary will not be able to contribute to a Traditional IRA.

There are several worthwhile tax benefits available to those individuals who qualify for a Traditional IRA. Traditional IRA contributions are tax deferred. Those individuals who contribute to the fund do not have to pay taxes on their income. The portion of your income that is put into the Traditional IRA is tax free. The money is taxed only after you begin withdrawing. Once you start to withdraw the money it becomes taxable. Generally you fall to a lower tax bracket and pay less tax on your income. Any money that you elect to put in a Traditional IRA during the year is deductible income on that year’s federal income tax return.

There is a yearly contribution and deduction limit for Traditional IRA retirement plans.

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

Individuals 50 or older can put in $6,000. In order to get your yearly deductions, all contributions must be made by the April 15 tax deadline. This simply means that for the current year you always until your income tax information is due to contribute.

• Those individuals who expect to be in a lower tax bracket after retirement reap the benefit of paying fewer taxes on their money.
• There is no set income limit for Traditional IRA plans.
• You can begin to use the benefits of your plan from day one.
• Before you make a decision about choosing a Traditional or Roth IRA or a 401k plan you should weigh out all of your options.

Depending on your particular situation the Traditional IRA might not be the best plan type.

• Even if you start a Traditional IRA, if your employer offers a retirement plan you may have trouble making your normal deductions.
• The Traditional IRA retirement plan penalizes any person who withdraws from their account before they are 59 1/2.
• At the age of 70 1/2 you must start pulling money out of your account or the IRS can seize a part of your contributions.

There are various retirement options but is it is important to do a little research and choose a retirement plan that meets your specific needs. Some individuals might go with the Traditional IRA while others prefer to take advantage of all their options and split their money between a Roth IRA and a 401k plan.

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