Individual Retirement Accounts (IRAs)

An IRA is an investment account that enables individuals to save for retirement.  There are two types of IRAs:  Traditional IRAs and Roth IRAs.

Each calendar year, you can contribute up to a maximum dollar amount. In 2013, total contributions to all your IRA accounts could not exceed $5,500 (or $6,500 if you're age 50 or older).  

Traditional IRA - A traditional IRA can be a great way to build your retirement nest egg while enjoying tax benefits. Contributions may be tax deductible depending on your income, tax filing status and coverage by an employer-sponsored retirement plan. You won’t pay tax on your earnings until you make withdrawals.  Starting at age 59 1/2, you can begin taking money out of your IRA without penalty.  You are required to begin taking contributions the year you turn 70 1/2. 

Roth IRA - Contributions to a Roth IRA are not tax-deductible.  However, your earnings grow tax-deferred and withdrawals can be made tax-free. Unlike a traditional IRA, you are not required to make annual withdrawals at a certain age. As with a Traditional IRA, you can begin taking money out of your Roth IRA without penalty starting at age 59 1/2. 

Rollover IRA - If you have assets in an old employer-sponsored retirement plan, it’s simple to move them into a Rollover IRA of your choice. You keep the tax benefits and get to choose how your money is invested.

Inherited IRA - If you’re the beneficiary of an IRA, opening an inherited IRA will preserve the tax-deferred status of the account. This could be the right choice for you if you don’t have an immediate need for the cash and you want to avoid taxes that would be due if you were to take the assets as a lump sum.

Custodial IRA - A custodial IRA makes it possible to set up a retirement account for a minor so that he or she can benefit from tax-free or tax-deferred growth. Custodial IRAs require that an adult be named as custodian of the account until the minor reaches the age when he or she can take control of the assets.