Many people during their lives deposit a certain percentage of their earnings in an individual retirement account. This is simply a personal savings plan that has a number of tax incentives that encourage you to save for your retirement. However, many people are still confused as to which type of individual retirement plan should they invest their money in to get maximum returns when they retire. The financial experts at Foster Financial Services Inc. have provided assistance and advice to thousand of potential customers in deciding which retirement plan they should invest their hard-earned money.
The financial professionals of Foster Financial Services Inc. emphasize that there are three individual retirement account that you can opt for. Each of these personal savings plan have their own set of advantages and disadvantage while offering specific tax incentives to their depositors. These are traditional individual retirement accounts (Traditional IRA), non-traditional retirement accounts (Non-traditional IRA) and Roth Individual Retirement accounts (Roth IRA).
Under the traditional individual retirement account, an individual has to deposit four thousand dollars under the scheme until he/she reaches the age of seventy years and six months. Moreover, people who are above that age of fifty can contribute an extra five hundred dollars under specific provisions of the retirement plan. Under this retirement plan, your contributions accumulate and are not taxable until you retire and withdraw the amount. Moreover, the amount contributed by your employer under this retirement plan is also not taxable. The investments made under this retirement plan are also tax-free and there are flexible plan options under this scheme.
The financial experts at Foster Financial Services Inc. state that non-traditional retirement accounts are similar to the traditional retirement accounts in many ways. However, your contribution will be taxed every year until you retire but lump-sum amount that you withdraw on your retirement will not be taxable. Moreover, the portion that represents earning on investments under this retirement plan will be taxable. However, the benefits under this retirement plan are similar to the traditional retirement plan.
People who opt to deposit their money in Roth individual retirement plan instead of the traditional individual retirement plans enjoy tax-deferred growth. Under this retirement scheme, your contributions will taxable every year but the amount withdrawn by you when you retire will not be taxable. However, this is only possible when you meet the requirements for qualifying withdrawals.
The financial experts at Foster Financial Services Inc. emphasize before opting for any retirement plan, you need to take into consideration a number of factors. These include your current and future income tax rates, rate of return ona the amount you invest and the availability of a retirement plan where you are employed. The purpose for which you tend to use the funds for will also be an important consideration. Under some individual retirement accounts, your marital status will also be taken into consideration when your deposit your money in any individual retirement account. These financial experts explain that it is essential for you to understand all the intricate details before deciding when retirement account to invest your money.
