The Main Types Of IRA Accounts

You've decided that it's time for you to put your money in an IRA, but, knowing that there are many different types of IRAs, you don't know which one to choose. First of all let's start with a simple question "What is an IRA account? ". The answer isn't that hard; an IRA is a special retirement account where you will be able to deposit your retirement money. This way, you will be able to benefit from tax-free investments so you can make more money, just by investing in the right place. There are different regulations for each type of IRA, regarding how much money you can withdraw or deposit, and different fees that you will have to pay. There are 5 main types of IRA accounts: the Traditional IRA (the most common among the five IRAs), the Self-directed IRA, SEP IRA, the Roth IRA, and also the Simple IRA account.

Traditional IRA is a retirement account with a $5,000 yearly deposit limit. The money which you deposit in the account is pre-tax, but, when withdrawing them, you will have to pay fees and taxes depending on your tax bracket. This type of retirement account is very affordable for those who, near retirement, will have a smaller salary then when opening the account. The Self-directed IRA is a very attractive IRA account for those who have experience in investing in stocks or funds, and also for those who wish to have complete control over their savings. The Self-directed IRA will allow you to make investments on your one. You will chose how much money is invested and where. There are some disadvantages as, without experience, you won't probably obtain the biggest profit or even loose some of the money.

The Simplified Employee Pension, also called SEP IRA for short, is a very profitable employer established IRA which allows the employer to contribute to a traditional IRA account belonging to the employee. The Roth IRA account is becoming more and more popular as the money with which an individual contributes to the account is after-tax money. Still, the funds that accumulate tax-free remain that way and there aren't any other fees or taxes that have to be paid until withdrawal. Also, you will be able to withdraw the amount with which you contributed to the account at any time, this being a very big advantage of the Roth IRA. Still, if you wish to withdraw the money within the first 5 years, there is a 10% penalty, although there are some exceptions.

The Simple IRA is also a popular retirement plan sponsored by the employer. This IRA account has the advantage of letting the employer establish a retirement plan, not only for himself, but also for his employees, also permitting the employees to deposit money in the account, but no more than $5,000 yearly. These are the main types of IRA accounts. Researching on them and taking into consideration their pros and cons will help you determine which retirement plan works best for you and your family. Choose wisely as it is very important for your future.

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