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What Is An Individual Retirement Account?

An individual retirement account, or IRA, is something that everyone should be aware of, especially as they are getting older. An individual retirement account is a personal, tax-deferred account for people who are employed and their spouses. You can set up an IRA at almost any bank, and tax laws will allow you to contribute up to $4,000 to your IRA for 2005-2007 and $8,000 for married people who file a joint tax return.

Without Going Into Debt

The IRA has many benefits, when you can put as much money into the plan as possible without going into debt. Basically whenever you have a bit of extra money you should be putting it into an IRA, and it will more than pay off in the long run.

Roth IRA

There are actually two major options that you have when it comes to the individual retirement account: the traditional IRA and the Roth IRA.

Traditional IRA

If you want to get an individual retirement account, you first want to check out the individual retirement account rules and learn about what a traditional IRA is and what a Roth IRA is. The traditional IRA is one that is tax-deductible, which means that the money that you deposit in your IRA is not going to be taxed.

Financial Institution

Remember that you can put almost anything into your IRA account. You will also have to speak to your bank about the details on this, because there are often some details that will change depending on which financial institution you are dealing with.

Roth IRA

There are some major differences between a Roth IRA and an individual IRA. For one, the tax breaks for a Roth IRA are very different. Unlike a contribution to a traditional IRA, a Roth IRA contribution will never be deductible. This is one of the biggest downfalls to a Roth IRA compared to an individual IRA, and which you will want to be aware of.

Worthwhile

Getting an individual retirement account, as you can see, can be very worthwhile. Just make sure that you are aware of all the details and know what you are doing before you get started.

Financial Advisor

If you are still not sure on all the details after reading this, one of the best things that you can do is speak to a financial advisor. You will be able to talk with them, give them some personal information, and from this they will be able to determine which type of IRA is going to be right for you.

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