If you’re under age 70 1/2 with earned income, you’re eligible to make a contribution to a traditional IRA, regardless of your income level. This account allows you to make pre-tax contributions and defer taxes on their earnings until they are withdrawn when you are near retirement. This reduces your overall tax payments—provided your tax rate is lower at the time of withdrawal than when you invest, which is true for many people. Only invest in an IRA if you are sure you will not need to withdraw the money early, as an expensive penalty will apply.
- Certain contributions are tax deductible in the tax year for which they are made.
Roth IRAs differ from traditional IRAs because the contributions are made in after-tax dollars. The money grows tax-deferred, and if you meet certain requirements, you get to take the money out of retirement, income-tax free.
- Because you pay tax on your Roth IRA contributions in the year you earn them (instead of when you withdraw them), Roth IRAs are often considered a good tool if you expect to be in a higher tax bracket when you retire than you are now.
- A Roth IRA can be a powerful tool to build wealth for your estate and give the benefit of tax-free income to your heirs, too.
This calculator is to be used for estimation purposes only. Years to reach saving goals are based on interest compounded monthly. We are showing you your potential account balance based on the amount invested, selected interest rate and length of time you choose to grow your savings. Since it is up to customers to correctly input rates and terms the financial institution is not responsible for its accuracy and the results are not guaranteed. Rate changes weekly. Interest credited monthly. Average daily collected balance method used to calculate interest. For current rates, contact your local Pinnacle Bank today.