Individual Retirement Accounts (IRAs) are a great way to save for retirement. There are a number of different IRA’s available which have different contribution limits and tax ramifications. You may invest in mutual funds, stocks, bonds, ETFs, cash or CDs within an IRA and it is important to evaluate your situation to determine which investment is most appropriate and which type of IRA you should utilize.
The different types of IRA’s are Traditional IRA, Non-Deductible IRA, Roth IRA, SIMPLE IRA, or SEP IRA. Small business owners have the ability to contribute more cash towards their plans than an individual and should review their business and cash flow to ensure you are taking advantage of each opportunity.
A traditional IRA contribution, $5,000 for 2010, can be written off against your Adjusted Gross Income but when you take distributions in retirement every dollar will be taxed as ordinary income. A Roth IRA is not tax deductible but every dollar you withdraw from this account, including all gains, are available on a tax free basis.
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