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Get retirement plan on track - El Paso Inc.: Personal Finance

Get retirement plan on track

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Posted: Sunday, March 9, 2014 6:00 pm

Turn on the television and you won’t lack for ads discussing the money you’ll need to retire comfortably.  Whether you plan to retire 20 or 30 years in the future, or right around the corner – if you’re concerned about having enough money, you’re in control from this day on.  Where do you go, how do you start? One option available to grow your retirement fund is opening and contributing to an IRA.    

What’s best for you? Making the decision to open a traditional or Roth IRA is a personal one, each with advantages and different outcomes. The bottom line: Both are good ways to save for retirement.

Traditional IRA

You may be able to reduce taxable income and deduct the money you put into a traditional IRA for the current year:

• If you have earned income and you’re under age 70½.

• There is no income limit to participate, however there are income limitations that determine the deductibility of your contribution.

• Your earnings grow tax-deferred.

• Distributions are generally taxable. Distributions before age 59½ are subject to a penalty tax unless you have an early distribution penalty tax exception.

• You must begin withdrawing your money by age 70½.

• The annual contribution limit is $5,500 for both 2013 and 2014. If you’re age 50 or older, you may contribute an additional $1,000 for a total of $6,500 for 2013 and 2014.

Roth IRA

Put “after-tax” dollars into a Roth IRA, your money can be tax-free at retirement:

• Because your contributions are after-tax dollars, they are not tax-deductible.

• Your annual contribution limit is $5,500 for 2013 and 2014. If you’re age 50 or older, you may contribute an additional $1,000 for a total of $6,500 for 2013 and 2014.

• Your earnings grow tax-deferred.

• Contributions can generally be distributed tax-free at any time.

• Earnings can be distributed tax-free if your first Roth IRA contribution was made at least five years ago, and you’re age 59½.

Remember, it’s never too late or too early to save for retirement. Before starting, consider meeting with your tax advisor about your financial situation and penalties for early distribution of your IRA.

Whatever you decide, the earlier you start saving the more money you’ll have at retirement.  

For more information, contact Judy Monteleone, vice president and trust officer, Members Trust Company, at (915) 774-1730 or (800) 772-4328, ext. 1730.

Non-deposit investment products available through Members Trust Company are not deposits of or guaranteed by the trust company, a credit union or credit union affiliate; are not insured or guaranteed by the NCUA, FDIC or any other governmental agency, and are subject to investment risks, including possible loss of the principle amount invested. Members Trust Company is a federal thrift regulated by the Office of the Comptroller of the Currency. For legal advice, please consult your attorney and/or accountant.

 

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