Can someone explain to me what an IRA is and what a Roth IRA is? Will my money be safe in an IRA?

Question

Can I put money into my IRA at anytime and is there a fee if I need to withdraw? What would be better to save and build money; cd's or IRA?

Answer 1

Traditional IRA Profile
Tax deductible contributions (depending on income level)
Withdraws begin at age 59 1/2 and are mandatory by 70 1/2.
Taxes are paid on earnings when withdrawn from the IRA
Funds can be used to purchase a variety of investments (stocks, bonds, certificates of deposits, etc.)
Available to everyone; no income restrictions
All funds withdrawn (including principal contributions) before 59 1/2 are subject to a 10% penalty (subject to exception).

Roth IRA Profile
Contributions are not tax deductible
No Mandatory Distribution Age
All earnings and principal are 100% tax free if rules and regulations are followed
Funds can be used to purchase a variety of investments (stocks, bonds, certificates of deposits, etc.)
Available only to single-filers making up to $95,000 or married couples making a combined maximum of $150,000 annually.
Principal contributions can be withdrawn any time without penalty (subject to some minimal conditions).

Tax Free
The biggest difference between the Traditional and Roth IRA is the way the U.S. Government treats the taxes. If you earn $50,000 a year and put $2,000 in a traditional IRA, you will be able to deduct the contribution from your income taxes (meaning you will only have to pay tax on $48,000 in income to the IRS). At 59 1/2, you may begin withdrawing funds but will be forced to pay taxes on all of the capital gains, interest, dividends, etc., that were earned over the past years.
On the other hand, if you put the same $2,000 in a Roth IRA, you would not receive the income tax deduction. If you needed the money in the account, you could withdraw the principal at any time (although you will pay penalties if you withdraw any of the earnings your money has made). When you reached retirement age, you would be able to withdraw all of the money 100% tax free. The Roth IRA is going to make more sense in most situations. Unfortunately, not everyone qualifies for a Roth. A person filing their taxes as single can not make over $95,000. Married couples are better off, with a maximum income of $150,000 yearly.

and yes your money is safe in an IRA.

Answer 2

There are income limitations involved with investing in a traditional IRA and also limitations to how much you can invest. Go to www.irs.gov and look all of this up. When you invest money you need to have reliable information so that you don't throw your money away. YOU go get the info in the proper places. Go to your bank and ask for info. Go to the library and get some investment books. You are ultimately responsible for your money. Investing is a very good idea so that you have something for later in life and that will be important. About early withdrawing from a traditional ira, you can under certain circumstances without that 10% penalty. Used to be for a first time home buyer and . . .can't remember. . .doesn't apply to me anymore so. . .IRA's are good investments. You ALWAYS ask if your investment is protected by the US government. They can invest your IRA money in different ways so check. CD's can be backed by the government or not, so ask. That's why you go out and learn. . .so you ask the right questions. LOL And until you are prepared, only invest in very safe investments.

Answer 3

Short version is- an IRA is a tax-deferred investment account for retirement. There are some pretty good penalties, possibly from the financial institution, and definitely in taxes, if you withdraw the money before you are 60 years old or so. It is generally a very secure investment.

CDs are also very secure, but you would have the money available at the end of your term (for example an 11 month CD, the money would be available at the end of 11 months). You can withdraw the money before then, but will have an early withdrawal penalty.

If you have a substantial amount of money to invest, neither of these is a great option, but for building and saving money for say, college, or a car, etc. I think a CD would be a solid, secure option.

I would also sit down and talk to an advisor at your financial institution (by that I mean Bank or Credit Union or Savings&Loan). If you might need some of the money to be available to you, it would be a good idea to find another account- savings, money market, etc. to deposit part of the funds in.

Answer 4

An IRA is a financial plan to put money aside for retirement, primarily. They are offered by banks, investments houses, etc. Depending on the underlying investment vehicle, some are less risky than others.

You can withdraw at retirement and pay taxes on the withdrawals as if they were income (IRAs). These were funded with pre-tax dollars. Withdrawals from Roth IRAs are not taxed, as they were funded with after-tax dollars. There are limits to the yearly contributions and penalties for early withdrawals except under certain circumstances.

CDs are often FDIC insured, and are therefore risk-free. Usually, IRAs are a combination of bond and stock funds balanced to meet your needs and risk-tolerance profile.

Call 1-800-FIDELITY or any other financial firm and ask them for information and recommendations.

Answer 5

the main effective distinction between a time-honored IRA and a Roth IRA is how your contributions are dealt with for tax applications interior the 300 and sixty 5 days wherein the contributions are made and how the withdrawals are dealt with for tax applications once you initiate taking distributions at retirement. a time-honored IRA supplies you with a tax earnings interior the 300 and sixty 5 days in which you're making your contribution (occasion: while you're making contributions $4k to a time-honored IRA your taxable earnings is decreased by potential of $4k subsequently you have a decrease tax criminal accountability interior the 300 and sixty 5 days in which you're making a contribution)...the earnings advance tax deferred yet you'll be able to desire to pay easy earnings tax on the quantity you withdraw at retirement......with a Roth IRA you don't get the tax earnings interior the years in which you're making the contributions however the earnings is which you do no longer pay any tax on the distributions. The question of that's extra advantageous relies upon specially on regardless of in case you would be in a extra physically powerful tax bracket at retirement than once you're making your contributions. yet another earnings to the roth ira which you don't get with a time-honored ira is that your contributions (no longer your earnings) may well be withdrawn previous to you achieving the age fifty 9 a million/2 without incurring an early withdrawal penalty. (money might desire to be interior the account for 5 years) regardless of regardless of in case you have a time-honored ira or a roth ira, the investment concepts you have (mutual money, shares, bonds, cds, money makret bills etc) are the comparable interior any specific company. i could propose you communicate including your interior sight economic company (assuming they have a brokerage branch) to communicate concepts.

Answer 6

an IRA is a Individual Retirement Account the roth IRA automatically takes out the taxes so when you take it out you wont have to pay taxes on with a regula IRA you are taxed when you take it out there is a fee if you withdraw early Roth IRA is the way I would go

Answer 7

IRAs are not investments. They are accounts that hold investments. The term "safe" describes the investment within the IRA...not the IRA itself (i.e. if you put your IRA money into CDs then you've got FDIC protection. If you invest in stocks there is no guaranteed rate of return).

Regarding the fees. There are no IRS fees for IRAs....however, the financial institution that holds your IRA may charge certain fees.