We all know that we should be saving for retirement, but beyond that, you’re confronted with a myriad of options. Social Security may not provide for all of your income needs in retirement, so you’re tasked with the responsibility of providing that for yourself. An IRA (Individual Retirement Account) is one common option that can help you save for your future. Here is some basic information you should know.

Choose your tax benefit. With IRAs, you can choose from either the Traditional or Roth options. Under a Traditional IRA, you can make contributions on a pre-tax basis, which will lower your taxable income for the year. Then your funds will grow with taxes deferred, but you will owe income taxes on the qualified withdrawals you take in retirement.

Or, you can choose a Roth IRA. Under this plan, you make contributions from post-tax money, so it doesn’t have an impact on your current income tax liability. But, you may enjoy tax-exempt income via your qualified withdrawals in retirement.

You may even be able to open both types of accounts.

Flexible withdrawals. With an IRA, you are required to take minimum distributions by age 70 ½. But you aren’t required to take those funds in cash. You have the option to move an investment out of the account, and into a taxable account if that is your preference.

Leave a legacy to your heirs. You can designate a beneficiary for your IRA, so that you can leave the funds to the person of your choice in the event that you pass away. If you leave your IRA to a loved one, make sure they understand how the account works.

There is plenty more to learn about IRAs before deciding if this savings option is right for you. Give us a call, and we can discuss the finer details, and help you decide if an IRA is a good fit for your retirement plan.