Investment Retirement Accounts In Today’s Economy


Traditional retirement accounts were established in 1986 in the U.S. The individual’s retirement account is held at a bank or brokerage institution and may be invested in several options. These investment options for the IRA accounts usually include certificates of deposit, stock, or mutual funds. The only criteria for being able to qualify for a traditional IRA is that the individual have a sufficient income to make contributions. The contributions towards the traditional IRA are tax deductible. The funds that are placed in the retirement account are not taxed until these funds are withdrawn from the individual’s account.

The Roth IRA is a second type of investment retirement account. This type of investment account differs from the traditional IRA because the Roth IRA withdrawals are never taxable and can be withdrawn tax free. The traditional IRA has more restrictions about withdrawals than does the Roth IRA as well. Both types of investment accounts draw no tax fees while the funds are kept in either account type. Learn more at

Unpaid taxes for the traditional IRA account funding is like a loan from the government. This type of government loan is repaid when the traditional IRA funds are withdrawn from the retirement account. The deferral does not actually benefit the account holder since the amount of the tax bill increases as the size of the funds in the account increase.

An IRA account does protect an individual’s monies from creditors. These retirement funds cannot be used as collateral for loans. A traditional IRA can always be transformed into a Roth IRA. However, the Roth IRA cannot be transformed back. Taxes and penalties must be paid before any of the funds from a retirement account can be withdrawn. This type of penalty makes it harder to use these funds for emergency purposes.

Withdrawals should begin by age 70 1/2. The investor must withdraw these funds by this retirement age. Half of the funds left after this age are subject to withdrawal by the IRS. This type of withdrawal rule applies only to traditional IRA funds. The Roth IRA is free from this type of mandate.

Traditional IRA accounts tend to have more restrictions for the individual investor. This type of retirement account can be converted to a Roth IRA at any time. The Roth IRA tends to have fewer penalty mandates. First home and educational expenses are withdrawal exceptions.

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