What Type Of IRA Accounts Are There For Individuals?If you are looking for a way to save money for your future, there is no better option than the Individual Retirement Account. IRA accounts are available to all the people in United States. They are also a superb tax planning measure. As an individual there are three types of IRA accounts for you to choose from. Each of them has its own features and characteristics which make it suitable or not suitable for your particular requirements. The first option that you have is the traditional IRA. In this type of account, you are allowed to contribute a decided sum or lower. The money that is contributed to the traditional IRA is free of tax. On the other hand you have to start taking distribution at the time you reach a certain age. More contributions are not allowed after this age limit. Be advised that taking money out of IRA before reaching this age is rather complicated. You should also keep in mind that the IRA distributions that come from a traditional IRA are liable to be taxed as per the rates applicable at that time. Traditional IRA is the most popular form of IRA accounts. It is generally suitable for most of the people who want both future planning and tax planning at the same time. The second option that is to be considered here is Roth IRA account. Roth IRA is an improvised form of Traditional IRA. The main purpose of the introduction of Roth IRA plan is that it is much more flexible. It provides the user a lot more control over the manner in which the money in IRA is handled. Moreover the IRA holder is also allowed to take money out of the account through a simpler process. Roth IRA has the advantage that it does not force you to start taking distributions. Neither is your contribution stopped after reaching a certain age. All the Roth IRA distributions are tax free. On the negative side Roth IRA is useless as a tax planning measure. All the Roth IRA contributions are liable to be taxed. You also have the option of a Self Directed IRA. In this IRA, the account holder has near complete control over his account. This IRA account is administered through a qualified trustee. The main task of the trustee is to maintain all the assets in the IRA. The main advantage of a self directed IRA is that the account holder is not bound to any particular assets type. The account holder is allowed to spread his investments in a wide spectrum. It is advised that you should have a word with your tax consultant before choosing which of the IRA accounts to opt for as you have to keep your long term goals in mind. |