The Benefits of Opening an Individual Retirement Account (IRA)
An IRA is an investment tool for U.S. citizens so they may save and grow funds for their retirement. It’s similar to a 401k retirement plan in as much as both offer tax advantages to the account holder.
A 401k plan is mostly employer-sponsored plan, while anyone can avail of an IRA plan regardless if the person is employed by a company or self-employed.
3 Great Reasons to Consider Getting an IRA
- Tax Advantage – the most obvious reason is the tax advantage of course, and the availability of 2 options, Traditional and Roth.
- Greater Flexibility – 401k plans usually have a number of choices for investments but an IRA can offer you an even wider range of choices.
- Supplemental Growth – Because it is not attached to an employer, IRA gives you more flexibility. In fact, most would advise getting an IRA on top of your 401k plan if you work in a company.
TYPES OF IRA
- Traditional IRA – A traditional IRA is similar to a 401k plan in as much as contributions are tax-deductible and taxes are deferred on earnings until you withdraw the funds during your retirement.
- Roth IRA – In a Roth IRA you also have tax advantages but it’s the opposite of a Traditional IRA. With a Roth IRA, your contributions are not taxed. Earnings may not be taxed and you will also not be taxed upon withdrawal on your retirement.
- Rollover IRA – Funds which were transferred (rolled over) from other retirement plans into a Traditional IRA. Although there are several reasons why this could happen, in most cases, it’s because an employee transferring to a new company decided to rollover their 401k plans to IRA instead of transferring the funds to their new employer’s 401k plan.
It’s important that you supplement your retirement plan. Recent studies have shown that because of several financial factors, pensions and 401k plans may not be enough to sustain you when you reach your retirement. Growing several investment plans now will definitely help you reach your retirement financial goals, especially if you plan to retire in another country.
Having an IRA is worth considering to enjoy your life to the fullest. However, if you have decided to retire in a foreign country and you’re considering to make another investment, you should have an online account for you to make international remittance worldwide.