Choosing an IRA(Individual Retirement Account) can turn out to be an important part of your financial future. IRA’s can be complicated though so you need to decide what type of IRA is right for you. This article will guide you on how to choose an IRA.
- The first step to choosing an IRA is to examine your finances and to calculate how much income you will be making 20 years from now if you continue on your current career path with no major set backs or surprises. This is important because calculating this will be a major determining factor in which type of IRA you are going to choose.
- The second step is to examine a traditional IRA. In a traditional IRA you can deduct contributions that you make to the IRA every year from your taxes, but you will be taxed when you take money out of the IRA account someday. This type of IRA can be a good choice for individuals who expect to be in a higher tax bracket in 20 years.
- The third step to choosing an IRA is to examine a Roth IRA. Roth IRA’s offer no tax benefit for initial contributions, but are tax free when you remove money from the account. If you expect to be in a lower tax bracket in 20 years then a Roth IRA is a good choice.
- The fourth step is to open your IRA once you have decided which type of IRA is right for you. You can open either a traditional IRA or a Roth IRA with many large investment firms. You can find investment firms to open your IRA with by performing an internet search for “open IRA” followed by your