The IRA is one of the most powerful retirement savings tools available to you. Even if you are contributing to a 401(k) or other retirement plan at work, you should also consider opening an IRA.
There are two primary types of IRAs: traditional and Roth. You are allowed to make a total annual contribution of up to $6,500 in 2023, and $6,000 in 2022. Generally, you must have at least as much taxable compensation as the amount of your IRA contribution. However, if you are married and file income taxes jointly, your spouse can also contribute to an IRA, even if he or she does not have taxable compensation. The law also allows taxpayers age 50 and older to make additional "catch-up" contributions of an additional $1,000 in 2022 and 2023.
Both traditional and Roth IRAs feature tax-sheltered growth of earnings, and both offer a wide range of investment choices. However, there are important differences between these two types of IRAs which are important to understand before choosing the most suitable IRA strategy for your needs. Our advisors work diligently to create the most suitable retirement plan for you.
Please contact us for guidance on choosing the appropriate retirement strategy for your needs.
Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 1/2 may result in a 10% IRS penalty tax in addition to current income tax. The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 1/2 or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax.