Building a secure financial future requires a solid understanding of retirement accounts and investment strategies. In this video, we will explore the various types of retirement accounts available to individuals, including Roth IRA, Traditional IRA, 401(k), and Spousal IRA, and how to choose the best one for your financial goals. We will also discuss the advantages and disadvantages of each type of account, as well as strategies for maximizing your savings and minimizing taxes….(read more)

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When it comes to retirement planning, there are multiple types of accounts that you can consider. Some of the most popular options are Roth IRAs, Traditional IRAs, 401(k)s, and Spousal IRAs. In this article, we will explore the features and benefits of each account type, to help you make an informed decision about which ones may be right for you.

Roth IRA

A Roth IRA is a retirement account that is funded with after-tax dollars. This means that when you withdraw funds from your Roth IRA during retirement, you won’t have to pay taxes on your withdrawals. Additionally, Roth IRAs do not have any required minimum distributions (RMDs), meaning you can keep your money invested for as long as you like.

The contribution limit for 2021 is $6,000 for individuals and $7,000 for those over the age of 50. However, there are income limits that can affect your ability to contribute to a Roth IRA. For 2021, if you are a single filer, your adjusted gross income (AGI) must be less than $140,000 to contribute to a Roth IRA. Married couples filing jointly must have an AGI of less than $208,000 to contribute to a Roth IRA.

Traditional IRA

A Traditional IRA is also a retirement account that is funded with pre-tax dollars. This means that contributions to a Traditional IRA are tax-deductible in the year they are made, and taxes are only paid when you withdraw money during retirement. However, Traditional IRAs do have required minimum distributions (RMDs), meaning you will have to start withdrawing a certain amount of money each year once you reach age 72.

The contribution limit for 2021 is $6,000 for individuals and $7,000 for those over the age of 50. Additionally, contributions to a Traditional IRA may be tax-deductible depending on your income level and whether you or your spouse have a retirement plan through your employer.

401(k)

A 401(k) is a retirement account that is offered by an employer as part of their benefits package. Like a Traditional IRA, contributions to a 401(k) are made with pre-tax dollars. Additionally, many employers offer matching contributions, which can help you maximize your retirement savings.

The contribution limit for 2021 is $19,500 for individuals and $26,000 for those over the age of 50. However, individual employers may have lower contribution limits for their employees. Additionally, 401(k) accounts have required minimum distributions (RMDs), which means you will have to start withdrawing a certain amount of money each year once you reach age 72.

Spousal IRA

A Spousal IRA is a retirement account that is designed for couples where one spouse does not work outside the home. This type of account is similar to a Traditional or Roth IRA, but the working spouse can make contributions on behalf of the non-working spouse. This can be a valuable way to increase retirement savings for couples with one income.

The contribution limit for 2021 is $6,000 for individuals and $7,000 for those over the age of 50. The working spouse must have earned income equal to or greater than the total contribution made to both their own IRA and the Spousal IRA.

In conclusion, there are multiple types of retirement accounts that you can consider when planning for your future. Whether you choose a Roth IRA, Traditional IRA, 401(k), or Spousal IRA, it’s important to carefully consider your options and choose the one(s) that best suit your individual needs and financial goals. Remember to consult with a financial advisor to ensure that you’re maximizing your retirement savings and making informed decisions about your future.