Millions of workers in the United States have access to savings plans by employers, such as a 401 (k).
But maybe you are one of the more than 70 millions of workers that remained outside of this coverage. For you, an account retirement staff, or IRA (for short) in English), it is an excellent tool to save for retirement. Many Institutions offer a variety of resources for help you plan for retirement.
Meanwhile, here we show you what You need to know about IRAs.
Generalities of the IRA
Some basic concepts about IRAs:
»An IRA is an account that you open in a financial institution. As usual, you need between $ 100 and $ 1,000 to be able do what. »You can contribute, annually, up to $ 5,500, or $ 6,500 if you are 50 or older.
»You can choose between the instruments of investment offered by the institution financial In general, banks offer certificates of deposit (CD) or money market funds. Other institutions, such as the agencies brokerage, life insurance companies and credit cooperatives, offer shares, bonds, mutual funds and other options.
»When choosing what to invest in, make sure take into account the impact they will have charges or commissions on earnings you’re going to get from your investments. As an example, the index funds, which only acquire a specific group of actions, usually have charges or commissions much lower than managed funds professionally
»Your best bet is to enable contributions or regular automatic contributions. Maybe you can agree on a deduction for roster; If not, you can enable a payment automatically from your bank account habitual.
Traditional IRA and Roth IRA
You can choose between two types of IRA:
Traditional or Roth. (If you work for your own account, you can opt for a SEP-IRA, which we analyze in another sheet of advice). The basic difference is in the taxation of your contributions and earnings. Your contributions to a traditional IRA They are tax deductible. When you extract that money, when you retire, you will pay current taxes on income about what you contributed or contributed, and about the profits of your investments. Is likely that, by then, you find yourself in a lower tax category. With a Roth IRA, your contributions do not they are tax deductible at the moment to do them, but you will not pay taxes about the money you draw (included the corresponding to earnings of How to save through an IRA investment), once retired. The graph below shows the comparison between the traditional IRA and the Roth IRA. Both the traditional IRA and the Roth IRA offer exceptions to the regulations that it governs the extraction or withdrawal of funds. By example, you can withdraw money from your IRA traditionally without suffering penalties for following reasons:
»To cover university expenses
»For the purchase of your first home
(up to $ 10,000)
»To cover certain medical expenses
»Due to total and permanent disability
»If you are a reservist who is called
provide active service
»If you inherit an IRA
Who eligible : Workers under 70½ years with income from work and spouses. Do not work, up to a limit.
Workers and spouses who do not work at any age, although They govern income limits. See the
IRS publication 590, at www.irs.gov, to know the current limits. How much can contribute $ 5,500 per year
$ 6,500 a year if you are 50 or older The excess contributions are taxed at 6% $ 5,500 per year $ 6,500 a year if you are 50 or older The excess contributions are taxed at 6%. How taxes Taxes on contributions they differ; you pay taxes on your contributions and on the utilities of your investments when you withdraw them, once retired. If, in addition, you contribute to a plan of the type 401 (k), your contributions could be taxable. Contributions are taxable, but you do not pay taxes on profits of your investments when you withdraw them, once retired. Normative for the extraction or withdrawal of money
You can start withdrawing money once you turn 59½ years old; before of that, you will pay a penalty or fine 10%, and current taxes on income. You have to start doing the compulsory minimum extractions to
70½ years Since then, You will face a penalty or fine from 50% for not taking distributions minimum required each year. The extractions of contributions they are not taxed. You can start withdraw the profits from your investments after 59½ years, always and when you have had the account for, at least five years.
There are no minimum extractions obligatory.
»If you are receiving a distribution in the form of an annuity Even so, you must pay the taxes commons about what you withdraw from an IRA traditional for those same reasons ones. However, if you have a Roth IRA, you can withdraw money without paying taxes for any of those reasons, at any time. IRA Rollover If you have a 401 (k) type plan from a previous job, you have several options about what to do with those funds. You can leave them with the Former employer (unless it is less than $ 5,000), collect that money (a bad idea for money that is supposed to be for retirement, and, in addition, you must pay taxes) transfer it to what is called an IRARollover. You can open a Rollover IRA in the same way you would open a new IRA. And if, later on, you get a job where they offer a 401 (k) type plan, you can transfer your Rollover IRA from your employer. Starting in 2015, only one IRA will be allowed to transfer for each 12-month period. All IRAs can be transferred, but given the deferredibility feature for the payment of unaRoth IRA taxes, complications may arise when filing your tax return. You should speak with a professional in the matter if you are considering the possibility of transferring a Roth account to a 401 (K) or IRATraditional Take measures. Make a plan for your retirement. Be specific and set realistic goals to help make the project measurable. Go to www.aarp.org/readyforretirement to access resources that will help you plan, budget and save. Q If you do not have access to a retirement plan at the expense of an employer, an IRA is your next best option. Open an IRA today through a bank or other financial institution. Understand the investment options available and, before opening your account, decide if they are right for you. Decide which type of IRA will provide you with the largest retirement income through a free and easy calculator. use, such as the one available at www.bankrate.com (search for “Roth vs. Traditional.”)