When it comes to simple, easy investing on your own, one of the most popular tools for Americans is the individual retirement account (IRA). An IRA is flexible and offers you maximum control – basically a do-it-yourself approach to saving and investing for your future.
An IRA is an individual retirement account designed to help you save for retirement. As long as you earn taxable income such as wages, salaries, fees, tips, bonuses, commissions and taxable alimony, you can contribute to an IRA.
What types of IRAs are there?
Traditional − You may be able to deduct current contributions to an IRA.
Roth − You pay taxes now and will be eligible for tax free withdrawals if the the withdraw is made at five years or more after the January 1 of the first year that a Roth contribution was made to the IRA and the withdrawal was on account of death, disability or attainment of age 59 ½.
Rollover − This IRA is designed for job changers, recent retirees or those wanting to consolidate retirement plans from previous employers.
Anything else about IRAs?
There is no minimum or required IRA contribution, and all earnings from a traditional IRA are not taxed until withdrawn. Withdrawals from a Roth IRA may be tax-free under certain conditions.
Also, keep in mind that any investing involves market risk, including possible loss of principal. There is no guarantee that investment objectives will be achieved.