IRA’s are retirement savings accounts with certain tax advantages, making them ideal savings vehicles for retirement. A lot of people mistakenly think an IRA itself is an investment – but it’s just the vehicle in which you keep stocks, bonds, mutual funds, exchange traded funds, CD’s and other assets.
Unlike business retirement plans, which are accounts provided by your employer, the most common types of IRA’s are accounts that you open on your own. Others can be opened by self-employed individuals and small business owners.
THERE ARE SEVERAL DIFFERENT TYPES OF IRA’S, INCLUDING:
- Traditional IRA
- Roth IRA
- SEP IRA
- SIMPLE IRA
Unfortunately, not everyone gets to take advantage of them. Each has eligibility restrictions based on your income or employment status. And all have caps on how much you can contribute each year and penalties if you yank your money before the designated retirement age.
It it important to work with a financial planning firm and accountant to determine the right IRA for your situation.