IS AN IRA RIGHT FOR YOU?
If you're looking to save more for retirement, getting ready to retire, or managing life events like starting a new job or leaving an old one, an individual retirement account (IRA) may be a good retirement savings strategy for you. Here are some of the basics to help you decide.
An IRA is a tax-advantaged account designed to help you save for retirement. It's similar to your retirement plan and it offers many of the same features and benefits. There are two main types of IRAs — Traditional and Roth — each with different advantages and tax benefits to allow your savings to grow, or compound, more quickly than in a taxable account.
- Traditional IRA — Allows your savings to grow tax-deferred. You won't pay taxes until you take income at retirement.
- Roth IRA — You pay taxes now and get to take tax-free withdrawals after meeting the 5 year holding period.
Ways to fund an IRA
There are multiple ways to contribute to an IRA, depending on your individual situation. A Lincoln retirement representative can go over your options with you and help make the contribution process easier.
- Annual contributions — Contributions to an IRA can be made each year for the current year (or a prior year, if made between January 1 and April 15). Contributions are subject to eligibility requirements and annual limits.
- Rollover contributions — Assets moved from one type of retirement account to another are generally considered rollovers. A rollover brings all your retirement savings together in one place.
- Roth conversion contributions — Assets moved from an eligible retirement account to a Roth IRA are considered Roth conversions. Amounts converted to a Roth IRA are generally subject to current income taxation and a five-year holding period.
Is an IRA right for you?
You might consider an IRA if:
- You want to save more for retirement
- You're changing jobs and would like to maintain control of your retirement assets
- You are nearing retirement and want to explore more retirement planning options