IRAs are investment accounts that are designed to provide you a tax-advantaged way to save for retirement. The special IRS status given to IRAs also comes with some limitations, such as how much you can contribute, when you can begin making distributions and what happens when you make your distributions too soon.
When to consider an IRA
Different types of IRAs
Investing in IRAs through Trubee, Collins & Co., Inc.
You should consider investing in an IRA if:
- Your employer (or your spouse's employer) doesn't offer a qualified retirement plan, such as a 401(k), 403(b), or a profit sharing or pension plan
- You're maximizing your contributions to your employer-sponsored plan and would like to save more
- You're changing jobs and need to move your assets from your former employer's qualified retirement plan
- You want to consolidate your retirement savings for easier management
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There are several types of IRAs you can choose from, each with their own set of rules and tax advantages. Your financial advisor can help you determine which of the IRAs makes the most sense for your situation. However, below is an overview that can help you determine which of the IRAs you may qualify for.
Traditional IRAs. With Traditional IRAs, you pay no taxes on your earnings until you begin taking distributions at retirement. In addition, your contributions may be tax-deductible if your modified adjusted growth income (MAGI) falls within certain limits.1 For more information on contribution limits, please consult your financial advisor or visit the IRS website here >
Roth IRAs. Contributions to a Roth IRA are made after taxes rather than pretax. However, earnings are tax-free if you meet certain conditions.1 For more information on contribution limits, please consult your financial advisor or visit the IRS website here >
SEP & SIMPLE IRAs. SEP IRAs and SIMPLE IRAs are retirement plans designed for the needs of small business owners and their employees. They offer tax-deductible contributions for the employers as well as tax-deferral for the employees.2 For more information on contribution limits, please consult your financial advisor or visit the IRS website here >
IRA Rollovers. Take your retirement savings with you when you change jobs or retire. This gives you investment flexibility and helps make managing your retirement savings easier. You can roll over your retirement savings into a Traditional or Roth IRA. For more information on contribution limits, please consult your financial advisor or visit the IRS website here >
Note: Rolling over your retirement savings into a Roth IRA may trigger a tax liability.
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Your financial advisor can help you determine which IRA makes sense for your particular situation and help you develop a retirement plan that can help you meet your long-term goals. Contact your financial advisor for more information.
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1Traditional IRA distributions are taxed as ordinary income. Qualified Roth IRA distributions are not subject to state and local taxation in most states. Qualified Roth IRA distributions are also federally tax-free provided a Roth account has been open for at least five years and the owner has reached age 59 1/2 or meets other requirements. Both may be subject to a 10% Fedearl tax penalty if distributions are taken prior to age 59 1/2.
2Withdrawals are subject to ordinary income tax and may be subject to a federal 10% penalty if taken prior to age 59 1/2. For SIMPLE IRAs the federal penalty increases to 25% if taken during the first two years of plan membership.
