Most people aren’t saving enough for retirement. If your employer doesn’t offer a retirement plan, opening some type of IRA in Marysville CA will help make it easier to save for retirement. First, however, it’s necessary to decide whether you want a Roth IRA or a traditional IRA. Each type of retirement account has its pros and cons.
Tax Implications
The first thing you need to decide is whether you’d like to pay taxes on the money put into the IRA in Marysville CA now or later. With a Roth IRA, you pay taxes now and then get to take the money out tax-free as long as the account has been active at least five years and you are at least 59.5 years old. A traditional IRA, on the other hand, doesn’t require taxes paid on the money when it’s put into the account, but instead when you take the money out of the account.
Age Restrictions
There aren’t any requirements with a Roth IRA for what age you must stop contributing and start taking money out. With a traditional IRA, this must happen by the time you reach 70.5 years old. There is a minimum distribution amount that must be taken each month starting at this age if you haven’t already started taking money out of the account.
Income Restrictions
People over a certain income can’t contribute to Roth IRAs. There aren’t any restrictions on who can contribute to a traditional IRA, but people who earn too high an income may not be able to deduct as much, or any, of their contributions to the IRA, depending on their filing status and modified adjusted gross income. As of 2016, both single people and married couples without plans at work can deduct the full amount. However, if at least one spouse has a plan at work, only a partial deduction or no deduction can be taken in many cases. The exception is a married couple filing jointly with the spouse covered at work that makes $184,000 or less.
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