Work Your Buck II

Posted by ECOKID on Jul 9th, 2009 | no comments home title

As you might have gathered from the previous Work Your Buck article, tax-free investments are always a good thing to take advantage of. Today, I’ll spend some time talking a little more about IRAs. Previously, I made reference to information regarding Roth IRAs but today we will take a look at Traditional IRAs. Traditional IRAs are used when folks like ourselves make contributions that are often tax-deductible which means you make contributions that before tax is fully taken from those earnings and income.

All the transactions and earnings that are made through this account have no tax impact. Withdrawals from such an account, made at retirement, however, are taxed as income except for the portions of the withdrawal that have been deducted previously. Depending on the nature of the deductions, using a Traditional IRA may be a more desirable path to save for retirement. Also, this may also help you if you are someone who thinks they may be in a lower tax bracket when you reach retirement age and the withdrawals are then taxed in that particular bracket.

Again, I’m going to rewrite what I just wrote. This kind of IRA account may also be beneficial to you if you plan to be in a lower income bracket. This means that your withdrawals will be taxed at a lower rate. This could be extremely beneficial to you if you believe this will occur. The contributions are pretty similar if not identical to the Roth IRA requirements.

If you haven’t done so already, seriously consider finding more information regarding these types of IRAs so that you can begin your personal retirement plan today!

With this said, I think we are on our way to building wealth pretty well here. In our next entry we will be covering 401K plans and discuss the importance of having these types of accounts.

One last thing, if you’ve made it this far, congrats! You are on your way to securing your future and we will soon start to look at ways to make your present more and more productive financially!

Best Regards,

ECOKID