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IRAs

Prepare now for retirement later.

If you have a 401(k) or other retirement plans at work, we think that’s great. But we also believe that even the plushest of nest eggs can use a little extra padding. That’s where an Innovations’ Individual Retirement Account can help. We offer Traditional and Roth IRAs, and both can be opened with as little as $5. The sooner you get started, the more money you’ll have in the long run.

What’s the difference between a Traditional and Roth IRA? Here are the basics:

Traditional IRA

Typically, a Traditional IRA is tax deductible during the year you make the contribution. The money you earn isn’t taxed until you withdraw it, so thanks to the beauty of compounding interest, your fund may grow a little larger than with a Roth IRA.

  • After age 59½, withdrawals are penalty free but taxed as current income.
  • You must stop paying into the account and begin taking distributions at age 70½.
  • You can fund your account by contributing money you’ve earned, by rolling over an old 401(k) plan or transferring from another IRA.
  • When contributing money you’ve earned, the maximum amount you can contribute is $5,500 for those under 50; $6,500 for those 50 and over per year.
  • You can tap into your Traditional IRA to buy your first home, pay a higher education expense, or make qualified medical payments, but those are the only distributions allowed and they are taxed.

Roth IRA

With a Roth IRA, you can’t take a tax deduction on deposits—at least not during the year you make them. The good news is that your earnings aren’t taxed when you’re ready to start taking withdrawals (as early as age 59½).

  • There is no mandatory withdrawal age.
  • Allowable distributions for a first home, higher education or medical expenses are not taxed.
  • You can contribute to a Roth IRA as long as you have a gross income of under $110,000 (individual) or $160,000 (married taxpayers). If your income(s) is higher, you’ll have to invest in a Traditional IRA.
  • You can fund your account by contributing money you’ve earned, by rolling over an old 401(k) plan or transferring from another IRA.
  • When contributing money you earned, the maximum amount you can contribute is $5,500 for those under 50; $6,500 for those 50 and over per year.

Ready to start saving?

An IRA can be pretty confusing. That’s why we’re here to help. If you’d like to learn more, just contact one of our IRA experts at 850.233.4400.

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