There are two main types of IRAs – the Roth and the traditional IRA – choosing the one which is right for you and your financial needs can still be a daunting task. Fortunately, we are here to help. Following the three below steps can help you determine the right type of IRA for you.
1. Know the Basics
The first step in choosing the right IRA is to understand the differences between the two. So below is a quick guide for determining which IRA is right for you.
Traditional IRA: The biggest advantage to this type of IRA is tax-deferred compounding. You will not have to pay taxes on your IRA’s investment earnings until you start taking distributions for it after you retire.
Roth IRA: Unlike traditional IRAs, this type of IRA has no restrictions governing when you are allowed to start taking distributions. Furthermore, qualified distributions from a Roth IRA are tax-free, not just tax-deferred.
2. Determine Your Eligibility
There are certain eligibility requirements associated with both Traditional IRAs and Roth IRAs. Do you know what they are?
For starters, you cannot make a deductible contribution to a traditional IRA is your income is above a certain level. Furthermore, if you make over a certain amount of money, you may not even be eligible for a Roth IRA. That is just the beginning. It gets complicated. To help simplify the task, I suggest you check out the TurboTax IRA Calculator.
3. Weigh Your Options
This is where a Safe Retirement Solutions and some in-depth financial planning can work wonders.
Safe Retirement Solutions is your full service, independent financial advisory firm dedicated to providing you with the very best in retirement income planning.
We help our clients in all phases of their retirement planning. We help them prepare for a retirement free from financial worries, so that they can enjoy their retirement years. We help to enable our retired clients with the transition of their wealth into a carefree income that will last them a lifetime.
If you have any questions or want to know more about what we can do for you, please contact Safe Retirement Solutions by calling 877-268-4086 or visit our website today!