Top 3 reason to contribute to Traditional IRA

16 Apr Top 3 reason to contribute to Traditional IRA

IRA stands for Individual Retirement Account. It is a financial vehicle designed to help people save for retirement which is generally 20 or 30 plus years away.  It is available through most financial institutions and offers certain tax advantages by the IRS. You can go to your favorite bank and ask to open an IRA (Traditional or Roth) account and here are the top 3 reasons why you should…. starting today.

1) Tax-deferred contributions (when qualified).  The money you save into your IRA account is deducted from your Taxable income every year so you are paying less to the government on taxes.  Note: The amount you can deduct from your taxes depends on your income level and whether you have a 401(k) through your employer.  For more info on IRA contribution. In addition, You don’t have to pay any taxes until you are taking withdrawals from your IRA account in retirement.  Note: For Traditional IRA you have to wait until at least you are 59 and ½ otherwise there will be a penalty for early withdrawal.

2) You don’t need to have a lot of money to contribute.  The annual limit currently is about $5,500 (higher if you are over 50) and contribution can be made with any amount throughout the year until April of next tax year.  Start with whatever number you can afford and work toward the maximum amount slowly.

3) You have a variety of investment vehicles such as mutual funds and stocks etc.  Whoever it is that you open your IRA account with is likely to have different options for you to invest.  It can be stocks, mutual funds, bonds, etc.  They are all different and can have its own advantages/disadvantages.  Do your research and consult financial adviser if need be.  It is nice to have options and I like stocks in general for my own IRA.