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About Englebert Financial Advisers, LLC
Located in the Lehigh Valley, Englebert Financial Advisers provides portfolio management services and custom financial plans for investors of all ages. We are a fee-based Registered Investment Advisory firm that acts as a fiduciary for our clients. We pride ourselves on providing an easy-to-understand business model, fee transparency, and excellent client service.

Disclaimer
The information presented in this video is believed to be current and should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. You should consult with a professional adviser before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. The articles were prepared by third-party journalists. Pension and tax rules are subject to change….(read more)

LEARN MORE ABOUT: IRA Accounts

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What is an IRA? Understanding Individual Retirement Accounts

When planning for retirement, it is crucial to consider financial strategies that can help secure your golden years. One such strategy is an Individual retirement account (IRA). IRAs play a significant role in providing individuals with a vehicle to save and invest for their retirement, offering numerous benefits and tax advantages. In this article, we will delve into the basics of IRAs and explore their various aspects.

An IRA is a type of personal retirement account that allows individuals to set aside funds specifically for retirement purposes. The account is often self-directed, meaning that the account holder has control over how the funds are invested, employing strategies they deem fit to reach their financial goals. IRAs are available to anyone with earned income, regardless of whether they also have access to an employer-sponsored retirement plan.

There are several types of IRAs, each with its unique set of rules, advantages, and limitations. The most common types are Traditional IRAs and Roth IRAs. Traditional IRAs offer tax advantages upon contribution, allowing individuals to deduct their contributions from their taxable income for the year in which they are made. The funds within the account then grow tax-deferred until they are withdrawn during retirement, at which point they are subject to ordinary income tax.

On the other hand, Roth IRAs have a different tax structure. Contributions to a Roth IRA are made with after-tax dollars, meaning there is no immediate tax deduction. However, all qualified withdrawals, including earnings, are tax-free in retirement, provided certain conditions are met. For example, the account holder must be at least 59 and a half years old and have held the account for at least five years.

IRAs offer a range of investment options, including stocks, bonds, mutual funds, exchange-traded funds (ETFs), and even real estate investment trusts (REITs), allowing individuals to tailor their investment strategy to their risk appetite and desired returns. It is important to note that different IRA providers may have varying investment options and fee structures, so careful consideration and research are essential when selecting an account custodian.

It is worth mentioning that IRAs have contribution limits set by the Internal Revenue Service (IRS) each year. These limits can be subject to change, so it is crucial to stay informed. As of 2021, individuals under 50 years old can contribute a maximum of $6,000 to their IRAs, while individuals 50 and older may contribute up to $7,000, taking advantage of a catch-up contribution allowance.

Furthermore, IRAs have rules regarding distribution. Generally, individuals cannot withdraw funds penalty-free before the age of 59 and a half. Early withdrawals may be subject to a 10% penalty in addition to ordinary income tax, although certain exceptions exist, such as for medical expenses or first-time home purchases.

Overall, IRAs provide a flexible and tax-advantaged option for individuals to save for retirement. They empower individuals to take control of their financial future through a wide array of investment options. Whether you opt for a Traditional IRA or a Roth IRA, careful planning and regular contributions can significantly enhance your retirement funds. As always, consulting with a financial advisor is recommended to ensure your retirement strategy aligns with your specific goals and circumstances.