Understanding Individual Retirement Accounts PC1347-Digital

RETIREMENT PLANNING

INDIVIDUAL RETIREMENT ACCOUNTS

Roth IRA is when you pay income taxes on the money you invest. With a traditional IRA, you put in un-taxed money and pay the taxes when you withdraw money in retirement; with a Roth IRA, you pay the taxes on the front end so that you are withdrawing money tax-free in retirement.

TRADITIONAL IRA

ROTH IRA

VERSUS

Income is taxable when you withdraw from IRA

Income is taxable when you contribute to an IRA

Almost anyone with earned income can contribute (deductibility may vary) You must start withdrawing money at age 70½

There are income limits

No required minimum distribution (RMD) at age 70½

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