Individual Retirement Accounts (IRAs) are an excellent way to build savings for retirement as well as receive significant tax benefits. If you do not have access to an employer-sponsored retirement plan, or you simply want to know how to open an IRA to supplement your retirement savings, there are several types of IRA accounts to choose from.
Selecting an Institution for your IRA
The first step to opening an IRA is selecting what type of institution to go through. There are a few options, including banks, brokerage firms, and robo-advisors. Depending on what your objectives are, each option offers a slightly different approach.
For example, robo-advisors are typically more hands-off and inexpensive but require a certain level of comfort with technology and online dashboards. More hands-on investors may want to go through a bank or brokerage where they have a larger selection of investment options and allow you to talk with bankers and financial advisors.
Types of IRA Accounts
The most common IRA accounts include Traditional IRAs, Roth IRAs, and SEP IRAs. Each type of account offers different tax benefits.
- Traditional IRAs — Any person with taxable income can open a traditional IRA. Contributions to a traditional IRA are typically tax-deductible and the earnings are tax-deferred. Once you start making withdrawals during retirement, those funds are taxed as regular income. You can contribute up to $6,500 to a traditional IRA, or $7,500 if you are 50 or older.
- Roth IRAs — For people with a bit lower income level, a Roth IRA is a great choice. The contributions are not tax-deductible, but you will not have to pay any taxes on withdrawals in retirement. A Roth IRA can also serve as a backup emergency fund if something unexpected arises as you are not penalized for taking out money before retirement. The contribution limits are the same as a traditional plan, but you must be earning less than $153,000 to contribute.
- SEP IRAs — Simplified Employee Pension (SEP) IRAs are accounts intended for business owners and those who are self-employed. They are very similar to traditional IRAs in that they are funded by pre-tax earnings and withdrawals are taxed in retirement.
Setting up an IRA through Republic Bank
The more you can add to your retirement funds, the more comfortable you’ll be in the future. At Republic Bank, we want to help you plan today for a better tomorrow. Among our several branches, we’ll help you get started on the path to a safe and secure retirement.
The benefits of Republic Bank IRAs include:
- Tax-deferred, long-term retirement savings for clients with earned income up to age 70 ½.
- Contributions can be made until April 15 each year for the prior contribution year.
- Some or all of your contributions may be tax-deductible.
There are various terms available to help you meet your goals — view our IRA account rates from 3-month to 60-month IRAs. To get started, reach out to us at 800-526-9127.