There was a time when people could rely on a combination of their work pensions and Social Security benefits to provide enough money to live comfortably during the retirement years. Those days are over. Now it’s important to establish alternatives ensuring there will be money to live on in the years to come. That’s where establishing an Individual Retirement Account comes into the picture. Here are some of the points to ponder before moving forward with the plan to start an IRA in Marysville CA.
Is There More Than One Type of IRA?
When approaching a financial professional about establishing an IRA in Marysville CA, the first point to ponder is what type would be best. This sometimes comes as a surprise to those who thought there was only one kind. The professional will go through each option and point out how it compares and contrasts with the rest. That makes it easier to settle on the one that is right for the client.
How Much Can Be Contributed Annually?
There are limits on how much can be placed in this type of account annually. The basic limit applies to those under the age of 50. People older than 50 may contribute a slightly higher amount over the course of the year. Knowing the maximum amount allowed for the current and upcoming year makes it easier to come up with a schedule for making contributions and make the most of the account.
When Must the Withdrawals Begin?
With what is known as a traditional IRA, the depositor will need to begin making withdrawals no later than the age of 70.5. Failing to do so will mean incurring some tax penalties. There is no need to withdraw large sums to comply with current laws. What will be necessary is to withdraw what is known as a required minimum distribution. A financial professional can advise the client of what amounts to the current RMD required by law. If the client has a Roth IRA, required minimum distributions do not apply and it is possible to withdraw funds as infrequently as the individual desires.
Now is the time to investigate Individual Retirement Accounts in more detail. Get more information here and weigh the possibilities carefully. The right choice will mean more financial security in the years to come.