Understanding IRA's and Roth IRA's
IRA's, also known as Individual Retirement Accounts are typically
orchestrated and must be approved by the federal government through an
employer, via the IRS, and are designed to contribute to and accumulate
a savings - or second retirement - by the time you reach 70 and a half
While there are no directly-associated percentage interest rates
associated with an IRA account, this does not prevent you or the holder
to contribute stocks, bonds, or CD's (certificate of deposits)
independently and allow the money to accumulate this way--in lieu of an
The idea of an IRA by principle is to create and contribute to a
life-savings or 'retirement fund' over time which otherwise involves a
10% penalty fee should you attempt to withdraw it earlier than the
agreed upon mature date and age - although in some instances you may use
some of your IRA funds to purchase a home without penalty.
There are at least two basic forms of IRA accounts, without getting into
the complexity of plans and dynamics such as rolling-accounts, for
These two primary types are IRA accounts, and ROTH IRA accounts. The two
of these are nearly identical in purpose and functionality, except one
charges you interest rates before putting the funds (cash) into the
account (Roth IRA) also known as depositing funds after-tax, while the
other does not charge you tax interest rates until you attempt to
withdraw the funds - atypical IRA account.
The ladder option may be most desirable for individuals because it
offers hope to taxing you in the current bracket - an older age - as
potentially having a lower tax percentage rate by the time you withdraw
the funds - technically a slight 'gamble'. However, a financial advisor
banker could give you further insight and help you make sense of the
pros and cons - as well as how they might weigh in your favor.
Statistically speaking, many people rely on IRA accounts as a
live-savings or 'retirement fund' because according to research and
publicized government data, Social Security funds are projected to
completely run dry by the year 2030, far before many of this era's
children, teens, and young adults reach their'‘retirement' maturity
date - or age.
IRA and Roth IRA accounts are desirable and made simple by deducting, at
your request, a select amount of funds (tax-claim worthy on your annual
returns), via cash, from your employer or other forms of income—not to
include inheritances. People choose IRA accounts because they offer a
sense of both security, as well as discipline in accumulating funds over
a period of time to rely on later on in their lives.