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IRAs and more
Just about everyone can afford a "tax advantage." But have you heard of IRAs, Roth plans, ESAs, SEP IRAs, or Simple IRAs?
Many more Americans should be acting on the tax advantages of investing in these accounts. They can be exciting and affordable long-term vehicles, whether for long-term accumulation or to pay for college education.
The traditional IRA offers you two important tax advantages. First, if you're eligible, you can deduct the total annual amount you contribute on your federal income tax return. Secondly, the earnings in your Traditional IRA are tax-deferred from federal income tax until you withdraw them from your account.
Unlike the traditional IRA, contributions to a Roth IRA are not tax deductible.
However you won't pay any federal tax on your earnings when you take them out, as long as certain conditions are met, and they're typically penalty - free as well. This gives the Roth IRA excellent flexibility to help you meet your retirement goals.
ESAs or Educational Savings Accounts, are specifically for college, elementary and secondary education funding purposes. An ESA lets you contribute up to $2000 each year for anyone under the age of 18. Distributions for tuition, fees, room and board and other educational expenses are not subject to income tax or the 10% penalty tax on earnings.
SEP, or Simplified Employee Pension IRAs are so named because they are a simple way for business owners and the self-employed to build retirement savings for themselves and their employees.
Simple or Savings Incentive Match Plan for Employees IRAs are for employers with fewer than 100 employees, and can be a cost-effective way to maintain a retirement plan. Employer contributions are required but the plan encourages employees to participate through salary deductions.
Specifics about each type of tax-advantaged account such as eligibility, contribution limits, deductibility, set up, funding, distributions, and tax treatment can vary from plan to plan. Most plans offer a greater or lesser amount of decision power on the part of the individual. For complete details, you can call a Foresters office and ask a representative for complete and current information.
When you're thinking long-term, here's one more thing to think about: the times are changing. You can no longer only rely on company pensions, and not even the future of Social Security is a sure thing.
To be more secure, take your retirement into your own hands. And those of a Forester representative, who will make it a personal challenge to ensure your golden years keep their gleam.
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for Americans
