The purpose of this video is to explain what an IRA is and can do for you. IRA simply stands for individual retirement arrangement.

There are two types of IRAs, traditional and Roth IRAs. The main difference is when you end up paying the taxes with a traditional IRA. The money you put in will lower your taxes in the current year. The money grows tax deferred, and you will pay income taxes on whatever you pull out of the IRA in retirement with a Roth IRA, the money you put in will be after tax and will not lower your tax bill in the current year.

However, your money will grow tax free. Anyone with earned income can contribute to their own IRA. Don't forget your spouse if applicable. A spouse without earned income may contribute based on household income. An important note is that you can contribute to an IRA as well as to your company sponsored plan, like a 401k. The IRS allows you to contribute up to a maximum combined amount to your IRAs each year.

Here's the current year's limit. By age. Choosing whether to fund Roth or traditional IRAs comes down to whether you'd rather pay taxes now or in the future. This is a complex decision based on your expected income and tax bracket now and later in retirement per IRS guidelines. If your income exceeds a certain threshold, you won't be able to contribute directly to a Roth IRA. There is no income limit when contributing to a traditional IRA. However, if you make above a certain threshold and or have access to a retirement plan at work, you will need to consider the backdoor Roth IRA strategy. If you'd like more information about the Backdoor Roth strategy, please watch this video or reach out to us.

We can help you decide which is best for you in order to maximize your retirement savings in a tax efficient way.

‍