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Is an IRA Right for You? – Carthage Savings and Loan
Should You Open an IRA?
Whether you're entering the workforce or shoring up your savings as you approach retirement, it's always important to think about the future. Opening an IRA, or individual retirement account, with Carthage Savings and Loan is a great way to add to your savings while enjoying a number of benefits. Wondering if an IRA is right for you? Learn more about these accounts and how they can help you achieve your financial goals.
When Should I Open an IRA?
As long as you or your spouse have a source of taxable income, you are eligible to open an IRA. The earlier you start, the more funds and interest you’ll accrue over time, so it's always a good idea to begin saving as soon as you can. This can be especially important if your employer doesn’t offer a 401(k) retirement plan.
Even if you currently participate in an employer-sponsored retirement plan, you should consider contributing to an IRA as well. If you switch companies, you'll no longer be able to contribute to your current 401(k) and will need to roll it over into an IRA or withdraw the funds. And since you can contribute to a 401(k) and an IRA at the same time, it's an easy way to expand your retirement savings.
What Types of IRAs Are Available?
Carthage Savings and Loan customers have two types of IRAs to choose from: traditional and Roth. Both types of IRA will allow contributions up to $6,000 in 2019, and up to $7,000 for those age 50 and older. However, there are some important differences between these accounts.
- There are no income limits for participation, but tax benefits vary based on income and participation in an employer-based retirement savings plan
- Contributions are tax deductible, but taxes must be paid upon withdrawal
- Funds may be withdrawn without penalties at age 59 1/2
- Distribution of funds must begin at age 70 1/2
- Funds may be left to beneficiaries, who will pay taxes on their inheritance
- Available only to those who meet specific income requirements
- Contributions are not tax deductible, but accountholders will pay no taxes at the time of withdrawal
- Contributed funds may be withdrawn at any time without a tax penalty, while earnings may be withdrawn without penalty after five years and at age 59 1/2
- Withdrawals are permitted without penalty in certain circumstances, such as first-time home purchases, hardship and educational needs
- No withdrawals are required during the accountholder's lifetime, and beneficiaries may extend distributions as desired
Not sure which account is right for you? A bank representative or financial advisor can help evaluate your needs to determine which you should choose.
Ready to Open an IRA?
There are many benefits to opening an IRA, but one of the most significant is peace of mind for your future. At Carthage Savings and Loan, we'll help you choose the best IRA for your situation with competitive interest rates and no setup or maintenance fees. Contact your nearest branch today to learn more and begin saving for a brighter retirement.