An individual retirement account (IRA) is necessary for building retirement savings for future use. There are several types of IRAs in the US which help in saving as well as investing in the future. These accounts are also helpful in paying for one’s home, qualified education, health expenses, etc. In case you have a Traditional IRA, you must know that the contributions are tax-deductible. In traditional IRA, when someone withdraws funds, it gets taxed as ordinary income. In such situations, it is recommended to withdraw the money early for all educational and medical expenses. Moreover, as a better retirement planning option, one can choose Roth IRA as one of the best retirement accounts if he/she wants to make contributions after the age of 70.
SEP and SIMPLE IRAs: SEP (Simplified Employee Pension) and SIMPLE (Savings Incentive Match Plan for Employees) IRAs have the same rules as the traditional IRAs. It allows an account holder to make retirement plan contributions into a Traditional IRA which is established in the name of the employee instead of the company’s name. Roth IRAs are one of the best retirement accounts as compared to all others. In this, you will never get deductions for any kind of contributions. Your earnings will never be taxed in the case of this particular account. There is no penalty and one can make a contribution even after the age of 70.
Which is the best retirement account to invest and save? Among all IRAs, Roth IRA proves to be one of the best retirement accounts as compared to other IRAs. It allows you to get a tax-free income after the retirement. It is a flexible option to make contributions for your lifetime. Even after the age of 70, you can continue to contribute until you quit working. Therefore, Roth IRA, which is one of the best retirement accounts will relieve you from the large tax bills and health insurance premiums. Hence, we can say that Roth IRA is a good choice for all ages.