Individual Retirement Accounts

When it comes to saving for retirement, many investors already know the benefits of traditional individual retirement accounts. Contributions may be currently tax deductible if you are not an active participant in another retirement plan or if your income is below certain income limits. The income from the IRA grows tax deferred until the date on which the participant must begin taking distributions – his or her required beginning date (RBD). Though the first distribution year is the year the individual turns the age of 70½, the RBD is not until April 1 of the following year. If the contributions into the IRA were tax deductible, then the distributions coming out will be taxed at regular income tax rates. A more difficult decision is whether or not to fund a Roth IRA or convert a traditional IRA to a Roth IRA.