For those of you who are new to investing, a traditional IRA in Deland, FL is a type of Individual Retirement Account into which you can put pre-tax or after-tax money and receive immediate tax advantages if your contributions are deductible. One of the great things about a traditional IRA is that you can invest and grow your money without paying taxes on it. Taxes are owed after you begin to receive distributions on it. Unlike a Roth IRA, a traditional IRA doesn’t have any income restrictions on it.
Benefits of a Traditional IRA
IRAs, of all kinds, provide several tax benefits that can help you save and invest for retirement. One of the best benefits is that even if you own mutual funds, stocks, or ETFs, they are tax-deferred as long as they are a part of your Traditional IRA In Deland, FL. If you own that stock without it being part of an IRA, any dividends you receive on it are considered taxable income in the year you received the money. This makes a huge difference in the long run because of compounding.
Why Traditional Over a Roth IRA?
The biggest difference between these two types of retirement accounts is the tax structure. The money you invest in a traditional IRA is considered tax-deductible in the year it was invested because the traditional IRA is a tax-deferred account. While anybody can open up a traditional IRA, people who also have a retirement plan through their employer are limited to how much money they can invest if they want that money to be a tax deduction.
