IRA Center This is the internet’s source for information on Retirement Accounts
for beginners and professionals. The following information covers traditional IRAs, roth IRAs, 401(k)s, 401(k)
rollovers, SIMPLE IRAs, SEP IRAs, 403(b)s, SARSEPs, Keoghs, Pension Plans. Do you participate in a retirement plan
through your employer? You may be illegible to start a Traditional or Roth IRA as well.
Why Start an IRA?
Can you afford not to start an IRA? When you retire, how much income will you need to cover the life style you want to live and where will that
income come from. As of 1999 the maximum benefit paid to an individual by social security is $1,373 per month.
If you do qualify for the maximum, could you live on this amount alone today? Another concern you should have is
whether or not social security will be there at all. Greenspan in one of his recent public addresses cautioned
the government about the future of social security stating if something is not done to fix it, it could go broke
in 30 years. Hope for the best but plan for the worst.
IRA: Individual Retirement Account An IRA is an account that allows qualified investors to make limited monetary annual contributions. Monetary
contributions may be tax-deductible or non-deductible and grow tax-deferred or tax-free. Monetary contributions
in a self-directed IRA may be invested into a wide variety of products (i.e. money markets, bonds, mutual funds,
unit investment trust or stock).
earnings accumulate tax-free and are not taxed at the federal level at withdrawal if the money is used to pay
for higher education expenses.*
Remaining funds from one child's education IRA may be rolled to another child's IRA.
* Provided that a Hope credit or a Lifetime Learning credit is not claimed on behalf of the beneficiary during
the same tax year.
Many people don't realize an investment of $166.666 per month ($2,000 per year) in an IRA for 30 years at an average
annual rate of return of 10%, would grow to a value of approximately $363,887.00. This assumes all capital
gains and dividends are reinvested with no distributions taken. To see the different future values of untaxed
growth at different rates of return, see the Future Value
Chart.
Most people start an Individual Retirement Account, IRA, to help them save for retirement. Would you want to
face retirement with no savings or social security? The answer? Start investing today!
