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The Different Types Of IRA

George Sterling | Friday, January 4th, 2013

Retirement is a crucial period in our lives. Each and every one of us works throughout our career life to secure our future retirement life. One of the best ways to secure a comfortable retirement is taking on an IRA plan. There are several IRAs available to choose from, each tailored for the unique needs and wants of individuals. If you are willing to sign up for an IRA, it is important for you to know what your options are. Here are some of the most common IRA options available to choose from:

 

Traditional IRA

In 1975, the federal government passed a legislation that allowed the creation of saving funds that could avoid taxation. These were introduced to help people save for their retirement. A traditional IRA allows you to contribute and save your funds for your retirement. The benefit of this IRA is that you do not incur any tax when you contribute your funds into the account. However, once you start withdrawing money from it after your retirement, you will have to pay a certain amount of tax depending on your tax bracket.

Roth IRA

Roth IRA is also another popular savings account for retirement. It is different from Traditional IRA in the sense that all your contributions are immediately taxed when you add funds to the account. You do not have to pay a single penny when you are withdrawing these funds upon retirement. The Roth IRAs are suitable for only those individual who are aiming for long term benefits because contributing funds into a Roth IRA do not offer immediate benefits.

Self Directed IRAs

Self Directed IRAs are popular amongst small business owners and self employed individuals. In a self directed IRA, you have full control over how your investments work. You can easily decide where to invest through the IRA without any difficulties. Self Directed IRAs allow individuals to invest in real estate, stocks, precious metals and more. If you are opting for a Self Directed IRA, it is important that you have enough information about the rules and regulation of the IRA. There are certain investments that are prohibited in a Self Directed IRA. If you are unsure of which investments are prohibited, you should immediately consult your financial advisor.

Gold IRA

Just like Self Directed IRA, Gold IRA is designed for individuals who particularly favor investing in gold. There are a number of gold investing options available through this IRA. You can easily purchase many gold coins issued by different Mints of the world or invest in gold stocks. Whichever option feels the best for you, never forget to take advice from a professional who is an expert in precious metal investments.

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