Choosing the Right IRA

IRAs are investment accounts that provide you ways to save for retirement with a tax advantage. Consider investing in an IRA if your (or your spouse’s) employer does not offer a qualified retirement plan; you have maximized your contributions to your employer plan and want to save more; you are changing jobs and need to move your assets from your former employers qualified plan; you want to consolidate your retirement saving under one roof. A Brighton Securities financial advisor can explain the advantages of IRAs together with detailing the appropriate asset allocations within the plan, contribution levels and withdrawal qualifications.

With your many options, how do you know which IRA is right for you?

In general, the Traditional Deductible IRA is most attractive to eligible individuals who anticipate being in a lower tax bracket in retirement.
The Roth IRA appeals to eligible investors who expect their tax bracket to be the same or higher in retirement, those who are most interested in passing IRA assets to their heirs, or those who have a long time before they will need their IRA assets.
The Non-Deductible Traditional IRA may be a viable savings option for those who do not qualify for a Roth or Traditional Deductible IRA.
Those who are focused on the future needs of younger family members should consider the tax-free benefits available with an Education Savings Account. To make the best decision with so many IRA options available, you must consider factors like your current and future tax rates, your income and marital status, your anticipated use of the IRA funds, and the availability of a retirement plan at your place of employment.

At our firm, we understand the significance of your retirement planning decisions. We offer the services you need to better understand which IRA is best for your personal financial situation. Contact us today for a complimentary consultation.

Individual Retirement Accounts (IRAs) can be an important source of retirement income for your future. These facts will help you in building your IRA savings:

Annual contributions for Traditional and Roth IRAs are $5,000 for 2008. The "catch-up" contribution increases to $1,000 for those ages 50 or older by year-end, for a maximum contribution of $6,000.
The 2008 contribution limit for a SEP IRA is $46,000 or 25% of compensation, whichever is less.
The 2008 deferral limit for a 401(k), 403(b) or 457 plan is $15,500. The additional $5,000 catch-up contribution is available for those ages 50 and older by year-end, for a maximum contribution of $20,500.
A SIMPLE IRA has a $10,500 annual contribution limit in 2008. The $2,500 catch-up brings the total contribution for those ages 50 and older by year-end to $13,000.
An individual (or their contributing spouse) must have compensation in the year for which the IRA contribution is made. Compensation includes salaries, wages, tips, commissions, bonuses, alimony, royalties and "earned income" in the case of a self-employed individual. Eligible compensation MUST BE from personal services currently rendered.
Compensation DOES NOT include any amount received as deferred compensation, pension or annuity income, unemployment compensation, rental income, interest or dividend income, royalties from investments or any other amount not includible in gross income.
Traditional, Roth IRAs and Education Saving Account may be established on behalf of an individual and contributions may be accepted for a particular tax year until the due date for filing the individual's Federal income tax return — NO EXTENSIONS. This means April 16, 2009 is the last day to establish IRA accounts and/or make contributions for 2008. When the due date for any act for tax purposes — filing a return, paying taxes, etc. — falls on a Saturday or legal holiday, the due date is delayed to the next business day.

We hope these facts will help you in planning your IRA contributions. If you have questions or want to learn more about ways to save for your retirement, please contact us.