The Individual Retirement Account (IRA) is one of the most popular tools for Americans to build up savings for retirement. Traditional IRAs are flexible and offer a variety of investment options. You decide how much you want to invest (up to a maximum allowed per year) and how often to contribute to your IRA. As long as you’re earning income (income from investments is not considered “earned”), you’re eligible to contribute.
What traditional IRAs offer
- Potential for tax-deductible contributions
- No taxes until money is withdrawn
- A variety of investment choices
- Eligibility even if you’re in another retirement plan
Investing does involve risk, including possible loss of principal, and there is no guarantee that your investment objectives will be achieved. Starting at age 72, you must take minimum distributions from traditional IRAs.
How to open an IRA for yourself
Want to open a traditional IRA but don’t know where to begin? Your investment professional can help you. Before meeting with your investment professional, you should prepare by gathering the following information about your personal finances:
- Statements from your employer-sponsored retirement plan
- Statements from other investments, including any other IRAs
- Checking and savings account balances