Individual Retirement Accounts (IRA's)
The Individual Retirement Account (IRA) remains an excellent method of saving for retirement years. Any individual with wages or self-employment income may contribute to an IRA. With a Trusteed IRA, you have the added flexibility of investing in stocks, bonds, and mutual funds.
This type of IRA account offers two big advantages or incentives to encourage people to save for retirement. First, Traditional IRA contributions may be tax deductible on the account holder's tax return. Secondly, earnings on a Traditional IRA are not taxed until the IRA holder or beneficiary takes the money out. It is these accrued earnings, regular deposits, and the passage of time that combine to produce large account balances.
Unlike Traditional IRA's, ROTH contributions are not tax deductible. However, if you satisfy the requirements, qualified distributions (including earnings) are tax-free. Another advantage associated with Roth IRA's is that they are not subject to the Required Minimum Distribution (RMD) rules found in Traditional IRA's. Contributions can also be made to your Roth IRA after you reach age 70½ .