| There are many ways to save for one's | | | | half of these contributions will be confiscated by |
| retirement. It is very important to be well | | | | the Internal Revenue Service. The opposite of a |
| informed especially because few employers do | | | | traditional Ira, the ROTH Ira does not have any |
| offer retirement plans. Even in cases where it is | | | | penalties on withdrawals but the contributor is |
| offered corruption and mismanagement abound. It | | | | taxed as soon as he sets money aside. |
| means that individuals have to be proactive in | | | | Another disadvantage of the traditional Ira is that |
| managing their retirement saving. There are two | | | | it has a 10% penalty for early withdrawal from |
| types of Ira; the traditional Ira and the ROTH Ira. | | | | age 591/2 . This penalty can be waived for the |
| By choosing this retirement savings plan you | | | | following reasons a first time home purchase, |
| make monthly or yearly contributions into an IRA | | | | higher education expenses, medical expenses and |
| account. These savings are not taxed until | | | | payments to IRS among others. Otherwise one |
| withdrawn. Ira contributions can be held at a bank | | | | can only move money from an Ira by roll over or |
| or brokerage firm and can be invested in any | | | | transfer but only for a limited period 60 days |
| choice of ventures including stocks, certificates of | | | | maximum. At the end of the 60 days the |
| deposit or mutual funds. All earnings and profits | | | | contributor has to rollover the money back into |
| will remain untaxed as long as they remain in the | | | | the account. This is the only way to keep your |
| account. | | | | money from being taxed. |
| What are the main reasons for choosing a | | | | A traditional Ira also has contribution limits based |
| traditional Ira over the ROTH Ira or any other | | | | on age, income, presence of employer plan and |
| way of saving for retirement? The main | | | | joint husband-wife contributions, which the Roth |
| advantage of the traditional Ira is the tax savings | | | | Ira does not have. The Roth Ira can allow those |
| offered. Also the tax benefit is applied | | | | with extra income to increase their savings |
| immediately in the same year of contribution. If a | | | | without the constraints of the traditional Ira. |
| contributor will be at a lower tax bracket upon | | | | If you are in your fifties and think that you have |
| retirement, then the contributions will be taxed at | | | | not contributed enough into your Ira then you can |
| a lower bracket upon withdrawal. This can lead to | | | | always make catch-up contributions so you can |
| substantial savings in taxes. | | | | save enough for retirement. Financial experts |
| Some of the disadvantages of the traditional Ira | | | | agree that it is never too late to start saving for |
| include penalties applied for early withdrawals. | | | | retirement and advice younger people to start as |
| Contributors have to wait until the age of 70 to | | | | soon as possible. |
| withdraw their contributions. If they do not then | | | | |