Have been evaluating retirement accounts, and are considering traditional IRA investing? Wondering how it impacts your taxes? Here are some pros and cons of an IRA explained, so you can pick the right retirement account.

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The video addresses the topics below:
– What is an IRA
– How does an IRA work
– Can kids have an IRA
– What is a Roth conversion
– Is an IRA right for you

Hope you like the video and stick around for more finance fun! And please let us know your thoughts (or a suggestion for a video) by leaving a comment!

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The information presented in the video and the description is for educational purpose only. The presenter(s) / speaker(s) / Easy Peasy Finance are not financial advisors, and do not provide investment advise. Please consult a qualified financial advisor before making any investment decision….(read more)

LEARN MORE ABOUT: IRA Accounts

INVESTING IN A GOLD IRA: Gold IRA Account

INVESTING IN A SILVER IRA: Silver IRA Account

REVEALED: Best Gold Backed IRA

What is an IRA? Easy Peasy Finance for Kids and Beginners (Traditional IRA)

An IRA, or Individual retirement account, is a type of investment account that is specifically designed to help you save and invest for retirement. It offers various tax advantages and is a popular option for individuals who are looking to supplement their retirement savings.

One type of IRA is called a Traditional IRA. It allows you to contribute money on a pre-tax basis, which means that the contributions you make to your Traditional IRA are tax-deductible. This can help reduce your taxable income and potentially lower your tax bill in the year you make the contribution.

The money you contribute to a Traditional IRA can be invested in a range of financial products such as stocks, bonds, mutual funds, and other securities. The earnings from these investments grow tax-deferred, which means that you will not have to pay taxes on the gains as long as the money remains in the account. However, once you start withdrawing funds from your Traditional IRA in retirement, the withdrawals are taxed as ordinary income.

One of the key advantages of a Traditional IRA is that it allows your contributions to grow and compound over time without being subject to taxes. This can help your retirement savings to grow more quickly and may provide you with a larger nest egg for your golden years.

In addition to the tax benefits, a Traditional IRA also provides flexibility in terms of when you can access the funds. While the primary purpose of the account is to save for retirement, you are generally allowed to start making withdrawals penalty-free once you reach the age of 59 ½. However, if you withdraw funds before this age, you may be subject to a 10% early withdrawal penalty, in addition to paying taxes on the amount withdrawn.

It’s important to note that there are limits on the amount you can contribute to a Traditional IRA each year. For 2021, the maximum contribution is $6,000 for individuals under the age of 50, and $7,000 for individuals age 50 and older. These limits are subject to change, so it’s a good idea to check the current contribution limits each year.

In conclusion, a Traditional IRA is a great option for individuals who want to save for retirement while enjoying tax advantages. By contributing to a Traditional IRA, you can potentially reduce your taxes in the near term and build a substantial nest egg for your retirement years. However, it’s important to be aware of the contribution limits and potential penalties for early withdrawals. If in doubt, it’s always a good idea to consult with a financial advisor to make the best decision for your financial future.