Individual retirement account IRA is a simple account that you can use for saving for your income after your retirement. Every one of us should retire after some age and this age depends on the type of work we are engaged in.
You need to have an income source after your retirement and IRA is the best way to get income after your retirement. Putting in simple words, you are saving money for your future by making payments to your IRA account.
Some companies offer you 401K retirement plan where you make payments to your IRA account and the company will provide you bonus by depositing a percentage of your monthly payment in your IRA account. The more money you put in you IRA account, the more benefits you can reap. You should ask your company for 401k plan and with this plan, opening an IRA account is very easier. You can instruct the company to deduct these payments automatically so that you are relieved from the hazards of maintaining the account. With IRA account, you can also make real estate investments in the future.
There are 5 main types of IRA account. Roth IRA has tax benefits and withdrawals from these accounts are tax free. Traditional IRA deducts taxes from contributions while all earnings within IRA have no tax charges. However, for withdrawals you have to pay taxes. Sep IRA is an account which can be used by an employer to make payments to traditional IRA setup by the employee.
Simple IRA is very similar to 401k plan where both the employer and employee can make contributions but administration is much simpler. Self directed IRA is suitable for investors and you can use this account for making investments.
It is essential that all of you should know about IRA and plan for your retirement intelligently. The rules for different IRAs are different and you have to choose the type that is best suitable for you. If you have a continuous source of income after retirement, your post retirement life will be hassle free. Financial freedom is possible even at your sixties if you have set up an IRA.
Make sure to keep track of your IRA or IRA’s so they do not become party of the nations unclaimed money. After IRA’s sit dormant and they institution holding them is unable to contact the owner of the account, the IRA is turned over as missing money.
Then the IRA is unclaimed and considered lost property. To make sure this does not happen to you keep good records of your accounts and update your contact information with them EVERY TIME it changes.