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Facing the Future – What Is an IRA

By Guest Author On June 25, 2011 Under Success Secrets

What is an IRA? It’s simply the individual retirement account that holds investments. So choosing a Traditional IRA, a Roth IRA, a SEP IRA or any other type of individual retirement account will depend on the investor and their philosophy . Many people choose either a Roth or Traditional IRA, but opt for the self-directed option. A self-directed IRA puts the ultimate control in the hands of the account owner, who makes the important decisions for the account . With a self-directed IRA, the owner picks the custodian firm to house the IRA . Often they choose a custodian with expertise in alternative investments, offering non-traditional opportunities beyond the conventional stocks, bonds and mutual funds to include tax liens, real estate and real estate notes, even precious metals . The custodian company executes investments at the direction of the account owner, and on the owner’s behalf. Depending on the type of IRA, there are qualifying factors and contribution limits . Regulations differ on valid investments, although a self-directed IRA allows for greater options. The custodial company holding the IRA will decide on the list of investment products available , so the selection of a custodian is critical and often based on the opportunities offered. Individual Retirement Accounts were announced in 1974 with the enactment of the Employee Retirement Income Security Act. In 1981, the Economic Recovery Tax Act made it possible for all taxpayers under the age of 70 ½ to contribute to an IRA, regardless of their coverage under an employment-based pension plan. What is an IRA? It is simply a retirement plan account providing retirement savings advantages to the American taxpayer. There are many different types of accounts in the world of IRAs. They provide tax-deferred or tax-free savings for the account owner, and help grow retirement savings . What is an IRA? It is basically an account that delivers huge tax benefits when used to save money for retirement. Choose wisely.

 

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