An Individual Retirement Account (IRA) is an investment account that helps you save money while you work to cover expenses when you retire. If you're under 50, you can contribute up to $5,000 every year. If you're 50 and over, you can contribute up to $6,000 every year. You may be able to deduct your contributions from your tax return depending on your marital status, income and whether or not you or your spouse participates in an employer-sponsored retirement plan – this means that you would not pay taxes on the money until you take it out. The tax deductable IRA contribution limit is indexed for inflation and may increase in future years.
Traditional IRA
For a traditional IRA, the money you put into the account and the interest you earn is tax-deferred, depending on your income. You pay taxes on the money you put in the account when you take the money out for your retirement.
Roth IRA
For a Roth IRA, the money you put into the account is not tax-deductable, but the interest you earn is tax deferred. And you do not pay taxes on the money you put in the account when you take it out for your retirement.
Educational IRA
An Educational IRA is an investment account that helps you save for your children's education. As a parent or guardian, you can make contributions for a child under 18. Money you put into the account is not tax-deductible but the earnings on the account are deductable when used for qualified educational expenses. Come see us at Express if you are interested in opening an Educational IRA.
