An individual retirement account (IRA) is a type of savings account that gives people tax breaks for investing money for retirement. Because of those tax incentives, more of the money you save ends up in your pocket. It’s never too early (or too late) to plan your retirement, so here is the rundown on IRAs, why you need one, and how to get started.
Contrary to what many believe, an IRA isn’t complicated at all. It’s not an investment itself, it’s an investment account that you set up at a financial institution (like SeaComm!)
There are two types of IRA’s: Traditional and Roth
Traditional IRA. The money you contribute may be deductible from your taxes for the year. Traditional IRAs provide a tax deduction for some people, along with tax-deferred interest. A traditional IRA is best if you believe that your tax rate will be lower at retirement than it is right now.
Roth IRA. Contributions are made with post-tax dollars, which means that you can’t deduct them from your taxable income. The primary benefit of contributing to a Roth is that in retirement, your withdrawals are not taxed at all. Therefore, a Roth IRA is best if you believe your tax rate will be higher at retirement than it is at this moment in time.
There are plenty of reasons to consider opening an IRA with SeaComm:
- No minimum balance is required to open an IRA at SeaComm, and there are no monthly fees.
- In both Roth and traditional IRAs, the investments grow tax-deferred, which means that you owe nothing on your gains as long as the money remains in the IRA.
- IRAs allow individuals to contribute up to $5,500 per year, in addition to what you’re already contributing to a 401(k) or other employer-sponsored retirement plans.
- Although you shouldn’t withdraw money from an IRA before you retire, the IRS does allow individuals to take out money before the age of 59 ½ to pay for necessary expenses. (Click here for specifics)
How to open an IRA. It’s simple! Stop in to any of SeaComm’s 6 convenient branch locations in Massena, Potsdam, Malone, Canton, Ogdensburg, and Plattsburgh. If you have any questions, feel free to contact SeaComm’s IRA Specialist, or contact a SeaComm Financial Services Representative at 315-764-0566.