Even if you're saving with a 401(k) or other employer-based account, an individual retirement account should be an integral part of your retirement plan. The reason: Your earnings accumulate inside an IRA tax free, supercharging the already powerful effect of compound interest.
The biggest decision you'll face these days is not whether to open an IRA, but rather what type of IRA to go with -- the more traditional tax-deductible IRA or the Roth IRA, which lets you take tax-free withdrawals in retirement.
This tutorial explains the basics of each, provides the tools to help you make the right decisions and describes the techniques needed to keep your IRA runningsmoothly.
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- What's Your Deduction?
- Roth or Deductible IRA?
The answer depends a lot on your tax bracket today and tomorrow. - How to Get Your IRA Up and Running
Bank, broker or go it alone? IRAs give you the flexibility to choose who will manage your account and what will go into it. - Converting Your Deductible IRA to a Roth
You won't be penalized, but you will owe taxes. Here's how to soften the blow. - Moving your IRA Money
Direct transfers and rollovers let you add funds or switch sponsors. - Cashing Out Early
Generally you'll pay tax penalties for draining your IRA early, but there are exceptions. - Tapping Your IRA in Retirement
Here's what you'll need to consider when retirement day comes.
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Tapping Your IRA in Retirementretirement You can cash in your IRA all at once, but doing so could subject you to an enormous tax bill. You'll probably do better tax-wise by taking out as little as necessary each year.
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Make a Plan for Your Retirement Savingsretirement The first step to effectively using your 401(k) is to assess your retirement needs.
