In order to have a financially secure retired life, many individuals keep aside a portion of their current income and invest the accumulated amount in an individual retirement account. Such an account is simply a personal saving plan that has many tax incentives, which encourage you to save for your retirement. However, in spite of the benefits of such retirement schemes, many people are perplexed as which individual retirement plan they should invest their hard-earned money in to reap maximum returns when they ultimately retire. The financial specialists from Foster Financial Services Inc. have offered valuable assistance and advice to many potential clients in deciding which retirement plan ideally suits their needs and where they should invest their money in.
Foster Financial Services Inc Poulsbo, WA experts explain that an investor can opt for three types of individual retirement accounts. Each of these retirement accounts have their own set of advantages and disadvantages with reference to specific tax incentives that these schemes offer investors. The retirement schemes are traditional individual retirement accounts (Traditional IRA), non-traditional retirement accounts (Non-traditional IRA) and Roth individual retirement accounts (Roth IRA).
In the traditional individual retirement account, the investor needs to deposit four thousand dollars under the scheme until this investor reaches the age of seventy years and six months. However, under this scheme, it is possible for investors who have crossed the age of fifty to contribute an addition five hundred dollars under specific provisions of the scheme. An investor’s contribution keep accumulating every year and this amount is not taxable until he/she withdraws the amount at the time of his/her retirement. Similarly, the contributions, which the investor’s employer makes under the scheme, are not taxable. The investments made under this retirement plan are also tax-free and flexible options are available.
In the case of non-traditional retirement accounts, the experts at Foster Financial Services Inc. explain that these schemes are identical to traditional retirement accounts in a number of ways. However, the investor’s contribution in this scheme is subject to tax every year until he/she retires and withdraws the accumulated/lump-sum amount, which is not taxable. In this scheme, the portion representing investment earnings is also taxable. However, the benefits in this retirement scheme are identical to the traditional retirement plan.
In order to exploit the benefits of tax-deferred growth, investors may invest their money in a Roth individual retirement plan rather than traditional individual retirement plans. In this retirement scheme, the investor’s contributions are taxable but the accumulated amount that the investor withdraws on his/her retirement is not taxable. However, it only when the investor meets certain requirements under the scheme that the withdrawals are not taxable.
Foster Financial Services Inc Poulsbo, WA professionals emphasize that it is important for the investors to consider a number of factors before opting for a suitable retirement scheme. These include the investor’s current and future income tax rates, rate of return on the amount he/she invests and the availability of a retirement plan at the investor’s current place of employment. The purpose for which the investor intends to use the funds is also a consideration. These financial specialists explain that the investors need to consider these factors and other intricate details before making a decision on which retirement scheme to invest their money.