{"id":7313,"date":"2014-01-06T09:48:58","date_gmt":"2014-01-06T17:48:58","guid":{"rendered":"http:\/\/www.marketriders.com\/investing\/?p=7313"},"modified":"2016-12-21T07:28:14","modified_gmt":"2016-12-21T15:28:14","slug":"investing-basics-personal-iras","status":"publish","type":"post","link":"https:\/\/www.marketriders.com\/investing\/investing-basics-personal-iras\/","title":{"rendered":"Investing Basics: Personal IRAs"},"content":{"rendered":"

Saving enough for retirement can be a struggle. Many people work hard only to find they have too much month and not enough money.<\/p>\n

If you qualify for a workplace 401(k) or 403(b), that’s the place to start. Often, companies match savings into those accounts, and you get the extra incentive of tax savings.<\/p>\n

\"personal<\/a><\/p>\n

Yet a\u00a0personal IRA<\/a>\u00a0can be an important part of the mix. They come in a variety of forms with a variety of purposes.\u00a0Here’s a quick breakdown:<\/p>\n

Traditional or “rollover” IRAs<\/strong><\/p>\n

When people talk about IRAs, this is what they usually mean. If you are maxed out at your\u00a0workplace 401(k) plan<\/a>, you probably can’t contribute to one of these. However, a household with a single-earner can use a spousal IRA to save more and enjoy a tax break for doing so.<\/p>\n

Likewise, traditional IRAs are useful containers for past 401(k) plan proceeds, which you then “roll over” upon leaving a job. You can roll your money into your new workplace plan instead, but a traditional IRA is more flexible and offers the same tax-deferral features.<\/p>\n

Roth IRAs<\/strong><\/p>\n

Unlike traditional IRAs, the\u00a0Roth IRA<\/a>\u00a0is limited to after-tax contributions. So, there’s no immediate incentive to put money aside in them. Ignoring the Roth option, however, can be a mistake. Any money you set aside here grows tax-free, and Roth IRAs are much more flexible when it comes to withdrawals.<\/p>\n

You can trade inside a Roth without having to worry about capital gains taxes, just like a traditional IRA, and tax-free withdrawals in retirement are a powerful retirement income tool.<\/p>\n

SEP and SIMPLE IRAs<\/strong><\/p>\n

If you run a small business or have a small number of employees, these plans allow you to run a 401(k)-type operation at a reduced cost. SIMPLE plans allow for matching contributions for your employees.<\/p>\n

Self-directed IRAs<\/strong><\/p>\n

Most personal IRAs these days are, in practice, self-directed IRAs. If you open an IRA at a large brokerage, they will offer you a bevy of mutual funds designed to take away the work of selecting investments and, in some cases, they will offer portfolio management services at a fee.<\/p>\n

However, you usually are free to make your own calls on which investments to buy, and it’s perfectly okay to\u00a0hire an advisor to run your IRA<\/a>\u00a0for you, through the brokerage.<\/p>\n

You can mix and match these IRAs and your 401(k) plan at work and effectively\u00a0control your tax rates<\/a>\u00a0now and later, in retirement. A financial advisor should be able to help you design exactly the right combination.<\/p>\n","protected":false},"excerpt":{"rendered":"

Saving enough for retirement can be a struggle. Many people work hard only to find they have too much month and not enough money. If you qualify for a workplace … Read more →<\/span><\/a><\/p>\n","protected":false},"author":8,"featured_media":7315,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_wp_rev_ctl_limit":""},"categories":[8],"tags":[42,43,37],"yoast_head":"\nInvesting Basics: Personal IRAs | MarketRiders<\/title>\n<meta name=\"description\" content=\"A personal IRA can be an important part of your retirement mix. They come in a variety of forms with a variety of purposes. 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