Traditional Individual Retirement
Accounts (IRAs)
Individual Retirement Accounts
(IRAs) function as personal, tax-qualified retirement savings plans.
The earnings on these investments grow, tax-deferred, until the eventual
date of distribution. Moreover, certain individuals are permitted
to deduct all or part of their contributions to the IRA.
IRAs are set up as trusts or custodial accounts for the
exclusive benefit of an individual and his or her beneficiaries. You
can set up an IRA simply by choosing a bank, mutual fund company,
brokerage house or other financial institution to act as trustee or
custodian. The institution will give you the necessary forms to complete.
A lesser-known alternative is to purchase an individual retirement
annuity contract from a life insurance company. An individual cannot
be his own trustee.
As an alternative option, you may be able
to set up a Roth IRA, contributions to
which are not deductible, but from which withdrawals at retirement
won't be taxed.
For more details on the ins and outs of IRA
accounts, consider the following:
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