Individual Retirement Accounts

Ready to plan for the future? Good for you! Consider this an official pat on the back. Because at Innovations, we always encourage smart savings. If you have a 401k or other retirement plan at work, we think that’s perfectly great. But we also believe that even the plushest of nest eggs can use a little extra padding.

That’s where the Innovations Individual Retirement Account can help. We offer Traditional and Roth IRAs, and both can be opened with as little as $5. And during the 2008 and 2009 tax years, you can invest as much as $5,000. The sooner you get started, the sooner you’ll start earning money in return.

An Innovations Traditional IRA

Typically, this kind of retirement account is tax deductible during the year you make the contribution. The money you earn isn’t taxed right away, so thanks to the beauty of compounding interest, your fund may grow a little larger than with a Roth. That said, the earnings are taxed as soon as you make a withdrawal (you can make your first one at age 59½ without paying a penalty). When you turn 70½, you have to stop making contributions and start taking withdrawals.

You can tap into your Traditional IRA to buy your first home, pay a higher education expense, or make a qualified medical payment, but those are the only distributions allowed. And they’re taxed.

An Innovations Roth IRA

With this kind of account, the big difference is that you can’t take a tax deduction on deposits—at least not during the year you make it. The good news is that your earnings aren’t taxed when you’re ready to start taking withdrawals (as early as age 59½). There’s no mandatory withdrawal age either. Allowable distributions—likes a first home, higher education or medical expense—aren’t taxed.

However, the Roth does have an income requirement. But as long as you have a gross income of under $110,000 (individual) or $160,000 (married taxpayers) you can continue contributing to your account.

Making a late savings start?

Innovations can still help you save for retirement. Thanks to ‘catch-up’ contributions, you can add an extra $1,000 (for a grand total of $6,000) if you’ve turned 50 any time during that tax year.

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