An IRA is a tax-qualified savings account for individuals that allows the account holder to set aside money for retirement. Members pay ordinary income tax on the withdrawals, and they must start taking distributions after age 70 ½.
Costs and Considerations
Individual contributions may vary for the tax year
No minimum opening balance
Features and Benefits
Contributions may be tax deductible if eligible based on filing status, modified adjusted gross income, and active participation in qualified retirement plan
No IRS penalties after age 59 ½
Fixed rate of 0.5%. Dividends are compounded and paid quarterly
Avoid taxes when money is added
Traditional IRA contributions are tax-deductible on both state and federal tax
returns for the year a contribution is made.
After reaching 70 ½ it is required to start taking required minimum distributions (RMDs): taxable withdrawals of a certain percentage of the funds.
Members have until April 15th of the current year, or their tax return date to make an IRA contribution for the prior year (Does not apply to extensions)