Start your retirement savings with an IRA
Tax Tip of the Week
August 17, 2015
Start your retirement savings with an IRA
Are you new to retirement saving? If so, the choices can be overwhelming and you may be wondering where to start. One place to look: a 41-year-old option known as an individual retirement account or IRA.
- What is an IRA? An IRA is a savings account that you establish with a bank or investment company. In most cases, you can complete the application on-line and set up automatic withdrawals from your bank account to fund your contributions. IRAs come in two general types, traditional or Roth. You can establish more than one IRA, and you can contribute to IRAs of more than one type. The differences between traditional and Roth IRAs are mainly tax-related. For example, contributions to a traditional IRA generally give you a current year deduction. Your earnings inside the account are not taxed until you begin taking withdrawals. The withdrawals are taxable and you may have to pay a penalty if you take money from your account before age 59½. Contributions to a Roth IRA are not deductible. Earnings growth is tax-free and qualified withdrawals are generally not taxable.
- How much can you contribute? For 2015, the maximum contribution to all your IRAs is the lesser of your taxable compensation or $5,500. When you're age 50 or older (or will be by the end of the year), you can add $1,000 to your contribution.
IRAs can offer many benefits, including a federal income tax credit for making contributions. Let us help you determine what type of retirement account is the best choice for you.
"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
© MC 2015
August 17, 2015
Start your retirement savings with an IRA
Are you new to retirement saving? If so, the choices can be overwhelming and you may be wondering where to start. One place to look: a 41-year-old option known as an individual retirement account or IRA.
- What is an IRA? An IRA is a savings account that you establish with a bank or investment company. In most cases, you can complete the application on-line and set up automatic withdrawals from your bank account to fund your contributions. IRAs come in two general types, traditional or Roth. You can establish more than one IRA, and you can contribute to IRAs of more than one type. The differences between traditional and Roth IRAs are mainly tax-related. For example, contributions to a traditional IRA generally give you a current year deduction. Your earnings inside the account are not taxed until you begin taking withdrawals. The withdrawals are taxable and you may have to pay a penalty if you take money from your account before age 59½. Contributions to a Roth IRA are not deductible. Earnings growth is tax-free and qualified withdrawals are generally not taxable.
- How much can you contribute? For 2015, the maximum contribution to all your IRAs is the lesser of your taxable compensation or $5,500. When you're age 50 or older (or will be by the end of the year), you can add $1,000 to your contribution.
IRAs can offer many benefits, including a federal income tax credit for making contributions. Let us help you determine what type of retirement account is the best choice for you.
"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
