An IRA may be a safe and reliable way of slowly growing one's wealth over the long term, either for personal retirement savings or later education. There are five types of IRA accounts, with only one being a non-deductible IRA. A traditional IRA account is tax deductible, as are education IRAs, simple IRAs and simplified employee pension IRAs. The only non-deductible IRA account is called a Roth IRA, and is considered the best IRA account for saving for retirement.
A traditional IRA account requires one to pay taxes on the growth of the IRA. This makes choosing a non-deductible IRA easy since the Roth IRA is the only one available which aids in growing wealth throughout the years. The money placed in a Roth IRA account has already had taxes paid on it, freeing the account from being charged with further tax amounts. Many people look to the Roth IRA as the best retirement account since it allows money to stay in place and grow, while keeping it easy to withdraw without any acquirement charges unless the money is released before the recommended age.
A Roth IRA allows an individual to contribute a certain amount of money to an account every month which is invested and grows over the years. An individual must earn under a specific amount of money a year to qualify, whereas married couples must earn less than a slightly higher amount of money a year. These figures change over time and are important to know before deciding on investing in a non-deductible IRA account. No matter how much money is placed within a Roth IRA, it continues to grow over the years tax-free.
The Roth IRA contribution limits also change throughout the years, and one can only place a certain amount of money a year in a non-deductible IRA no matter what income level. If the growing funds are taken out of a Roth IRA before the age of 59 and a half, a fee will be charged which might take out a large part of the savings account. It is recommended that a person wait until after the age of 60 years old to acquire the accumulated money which has been growing tax-free from their contributions to the account.
Investing in a non-deductible IRA is a safe practice which can aid in the security of an individual's future. It also allows more freedom in the future by providing material sustainability which many use after retirement to vacation, travel or invest in new business ventures. One may place as much money as he can throughout the year in a Roth IRA, as long as it doesn't reach more than $5,000 US Dollars (USD). Higher amounts mean greater potential for that money to grow to higher levels, but any amount is eligible to grow into a good income at the age of retirement.