When you think about the golden years when you’re retired and riding off into the sunset, you want to make sure you’re going to have the funds needed to do such a thing. This is going to require some planning and saving. One of the best ways to save for your retirement is with an IRA. Regardless of the amount of money you have to contribute to your retirement fund, you can open an IRA and start saving. Mark Dicus & Company is here to talk about some of the tax advantages that can come your way when you contribute to an IRA.
What is an IRA & How Does it Work?
If you haven’t thought about your retirement yet, it is never too late to start. It is important to remember that anybody can open and IRA and start investing into their retirement. The money that you invest into your IRA account will continue to gain interest over time and you will be able to watch your money grow. As far as retirement is concerned, the sooner you start investing, the better off you are going to be. However, even if you are planning on retiring in 5 short years, you can benefit from opening and contributing to an IRA account.
What are the Types of IRA Accounts?
There are two different types of IRA accounts that you can choose from when you decide that is the direction you want to go.
– Traditional: This is an account that you contribute to with money that hasn’t been taxed yet. Because the money hasn’t been taxed yet, it will be taxable when you start to use it after you have retired. This type of IRA account also requires you to make a minimum contribution up to April 1st of the year you turn 70 and ½ years old.
– Roth: This is money that you contribute after it has been taxed. Many people like using this money because then it won’t be taxed when you go to use it down the road. Some people like that there are never any minimum contributions required for this type of IRA as well.
What is the Main Tax Advantage of an IRA?
When you are contributing to a traditional IRA account, you will see some tax breaks. Because you are contributing money that hasn’t been taxed yet, your taxable income will come down depending on how much you are putting in the account. With a Roth IRA account, the money has already been taxed, so you won’t see that same saving until later when that money is coming at you tax free.
Tax Preparation, Filing, Planning & More in Salt Lake City, St. George, West Valley City, Provo, Orem, West Jordan & Greater Cedar City, Utah
If you have questions about your retirement contributions and how they affect your taxes, you can turn to Mark Dicus & Company to help you sort it all out. We have the knowledge and training that is needed to answer all of your questions regarding your taxes and what your retirement contributions have to do with them. Call us today!