Making the Most of Your Traditional IRA

Making the Most of Your Traditional IRA

Making the Most of Your Traditional IRA

Your retirement plan doesn't have to be just your 401(k) or your pension. Savvy investors can diversify their plan to save for their golden years by setting up a traditional individual retirement account (IRA). A traditional IRA, which differs from a Roth IRA, allows your investment to grow tax-deferred until they're withdrawn.
Here are a few ways Traditional IRAs can help you maximize your retirement plan:
  1. Open more than one - Traditional IRAs come with contribution caps – It's $5,500/single, $11,000/married in 2015 – but you can open as many retirement accounts as you wish until you're age 70-1/2. Depending on your household's income or if you or your spouse are eligible to participate in an employee-sponsored plan, your entire contribution may not be tax deductible.
  2. Go back in time - Even though the calendar reads 2015, you can still open one for 2014. Federal law allows you to allocate any funds you contribute before the tax deadline (April 15) toward the previous year's contribution.
  3. Change jobs, not investment strategies - IRAs can also come in handy when you're about to leave jobs and need to move your 401(k) money. If your former employer requires that you withdraw your retirement money, you can move your distribution safely from your former employer's qualified retirement plan directly into a rollover IRA and avoid owing current income tax on the distribution.
If you choose to physically receive part or all of your money and do not replace the entire amount within 60 days, you will be subject to taxes, potentially including a 10% additional tax, on the amount kept.
An IRA can become the cornerstone of your personal retirement savings program, providing the foundation for your financial security. That's why it is so important to start planning today. Consult with a private banker at Republic Bank to help you determine how an IRA could help make your financial future more secure.

This information is not to be used as investment advice, but for informational purposes only. Republic Bank & Trust Company prohibits the dissemination, distribution or copying of this document without the Bank's prior written consent. Please consult your financial or tax advisor for further information. Member FDIC.