The Truth on IRA's
Part of my duties as a financial advisor entail making sure my clients save for retirement. Too often, some of them think their company sponsored 401K is enough. I got news--think again. You need to supplement that with another program. For young people, the traditional IRA is the answer. Put as much as $4,000 (2005 Max) in the account, hope to do it again every year, and when you retire at 65, I'll show you a decent nest egg that isn't contingent on the investment vehicles you're company has selected for their 401. IRA's are self-directed--you can allocate assets and diversify your current retirement portfolio as you wish and you can convert to a Roth IRA down the road should you want to evade the 70 1/2 RMDs and/or plan on leaving behind some assets for your heirs. IRA's sell themselves--put your money to work for you on tax deferred basis and wait until your 59 1/2 to withdraw monies. If you need to break your IRA for a qualified expense like the purchase of a first home, go ahead--the government will let you. Lastly, if you switch jobs, you can easily rollover your 401K holdings into your IRA. Morningstar has a great note on IRA's you can bet your bottom dollar I'll save and forward to my clients. For those of you considering your first IRA, remember to do so before April 15th so that you can get the tax break you so rightly deserve.As more and more companies have eliminated traditional pension plans, individual retirement accounts are increasingly becoming a cornerstone of many of your retirement plans. So it only makes sense that you take some time to make sure you are taking maximum advantage of these plans. IRA rules can be complex, but don't let that stop you. The rewards are great for those who know how to squeeze every drop of value from their accounts.
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