Information on traditional IRAs and Roth IRA's

Planning for your retirement is of course very important and one way to plan is with an IRA account. Here is some basic information on IRA accounts.

There are a number of different types of IRAs, which may be either employer-provided or self-provided plans. The types include:

• Roth IRA - contributions are made with after-tax assets, all transactions within the IRA have no tax impact, and withdrawals are usually tax-free. Named for Senator William Roth.
• Traditional IRA - contributions are often tax-deductible (often simplified as "money is deposited before tax" or "contributions are made with pre-tax assets"), all transactions and earnings within the IRA have no tax impact, and withdrawals at retirement are taxed as income (except for those portions of the withdrawal corresponding to contributions that were not deducted).
• SEP IRA - a provision that allows an employer (typically a small business or self-employed individual) to make retirement plan contributions into a Traditional IRA established in the employee's name, instead of to a pension fund account in the company's name.
• SIMPLE IRA - a simplified employee pension plan that allows both employer and employee contributions, similar to a 401(k) plan, but with lower contribution limits and simpler (and thus less costly) administration. Although it is termed an IRA, it is treated separately.
• Self-Directed IRA - a self-directed IRA that permits the account holder to make investments on behalf of the retirement plan.

You can set up your Individual Retirement Acount (IRA) with your bank, stock brokerage firm or other institutions.

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