Individual retirement accounts (IRAs), allow an individual to save money for retirement on a tax-deferred basis. It can be difficult to organize investments, choose the right type of retirement account, and pay all necessary taxes, so if you are an Oklahoma resident and have questions about planning your own future, it is crucial to speak with an experienced financial management team who can handle accounting, tax preparation, and other financial services.
Types of IRAs
There are few main types of IRAs, including:
- Traditional IRAs, which require employees to make contributions with money deducted from tax returns and then allow the funds to grow on a tax-deferred basis until withdrawal at retirement;
- Roth IRAs, which are made up of already taxed funds and allows for tax-free withdrawals at retirement;
- Simplified Employee Pension (SEP) IRAs, which are often utilized by small business owners who then contribute tax-deductible amounts to accounts for their employees; and
- Rollover IRAS, which are accounts intended to receive money rolled over from another retirement plan, such as a 401(k).
The Advantages of an IRA
Many people choose to invest in both a 401(k) account offered by an employer and an IRA. The advantages to this approach include the following:
- The ability to supplement current savings;
- Gaining access to a wider range of investment choices; and
- Taking advantage of tax-free growth and withdrawal.
Some IRAs have eligibility restrictions based on a person’s income or employment as well as caps on the amount that can be contributed each year. Those who withdraw money before retirement can also be heavily penalized.
Contact a Member of the CORE Financial Management Team Today
Everyone should have a firm understanding of the types of retirement accounts available to both employers and employees as well as the benefits and drawbacks of each one. At CORE, our financial management team is dedicated to helping our clients with their financial needs, including bookkeeping, accounting, payroll, and tax preparation, so if you have questions about any of these issues, please contact the CORE financial management team to speak with a dedicated employee who can help address your concerns. Our Oklahoma City office can be reached at 405-720-1244, while those at our Tulsa office can be contacted by calling 918-477-7650. To reach a member of our Lawton team, please call 580-353-2376 to schedule an initial meeting.