you forgotten your IRA? If you don't have one, should it be part
of your overall investment plan? Here are some compelling
reasons why this vehicle can help you plan for your future.
1. Tax deferral: Traditional IRAs allow your
investment earnings to grow tax deferred until withdrawn,
typically at retirement. For 2012, the maximum contribution
is $5,000, but for those aged 50 and over, the limit is
2. Deductibility: If you are a single taxpayer who
doesn't participate in an employer-sponsored plan and you
earn less than an amount set each year by the IRS, you can
deduct your contributions to a traditional IRA off your
income taxes. Note that Roth IRA contributions are not
3. Investment flexibility: IRAs typically give
investors access to a wider range of investment options than
workplace-sponsored plans such as a 401(k). Depending on the
financial institution you use to open your account, you can
invest in a broad array of mutual funds, ETFs, individual
stocks and bonds, CDs, annuities, even commodities and real
4. Convertibility: Traditional IRA holders can
convert to a Roth IRA to enjoy some of the additional
benefits listed below. But before you decide
to make a switch,
be sure to investigate the tax consequences of such a move.
5. Portability: If you have assets in an
employer-sponsored plan and you leave your job, you can
easily roll over those assets into an IRA. Rolling over your
assets can make sense particularly if you change jobs
frequently and don't want to devote too much time to
coordinating and tracking your accounts.
Additional Benefits of Roth IRAs
• Qualified tax-free withdrawals: Since Roth IRAs
are funded with after-tax dollars, your withdrawals are tax
free, as long as you have held the account for at least five
years and are over age 59 ½.
• No RMDs: Unlike traditional IRAs, Roth IRAs are not
subject to required minimum distributions (RMDs) once the
accountholder reaches age 70 ½.
Contact your financial professional to discuss a strategy for
your IRA or to see if investing in an IRA makes sense for you.
Withdrawals made prior to age 59 ½ are subject to 10% IRS
penalty tax. (In the case of a Roth, it must be held five years
as well.) Gains from tax-deferred investments are taxable as
ordinary income upon withdrawal.*
© 2012 S&P Capital IQ Financial
Communications. All rights reserved.
*Consult your tax advisor.
|Not FDIC Insured
||Not Bank Guaranteed
||May Lose Value
|Not a Bank Deposit
||Not Insured by Any
Federal Government Agency