Start Building Your Retirement With Tax-Advantaged IRAs.
The earlier you start saving, the more time you'll have to build your retirement account. Individual retirement accounts (IRA) are a simple, tax-friendly way to save for retirement. An Allstate personal financial representative
can help you learn about various types of IRAs that can help you grow your retirement savings faster and lower your taxes including:
- Traditional IRA: Contributions from Traditional IRAs may be tax deductible and growth in the account is tax-deferred, meaning you don't have to pay taxes on it until you begin withdrawals.
- Roth IRA: Earnings from Roth IRAs and withdrawals in retirement are typically tax-free. You can wait until retirement to withdraw money or use for eligible expenses like buying a first home and major medical expenses.
- Rollover IRA: This is a possible option when you change jobs. It allows you to move your savings from your employer's retirement plan into a tax-free, direct rollover IRA.
IRAs are a great way to save for retirement and lower your taxes. Think of your IRA as a basket of investments that can include mutual funds, stocks, bonds and annuities. We can help you determine what mix makes the most sense for you. The list below can help you understand the differences between Traditional and Roth IRAs:
- Tax benefits: Traditional IRAs deliver tax-deferred growth, while Roth IRAs provide tax-free growth potential.
- Withdrawals: Traditional IRAs are treated as ordinary taxable income upon withdrawal after age 59 1/2 years, while Roth IRA qualified distributions are tax free as long as certain criteria are met.
- Withdrawal penalties: There is a 10% federal early withdrawal penalty tax for Traditional IRAs unless you are over 59 1/2 years old. If you've had your first Roth IRA for more than five years, you can withdraw contributions at any time without tax or penalty—the principal can be taken out tax or penalty free at any time.
- Mandatory distribution: Traditional IRAs require minimum distributions beginning at age 70 1/2 years old. Roth IRAs have no mandatory distribution requirements.
An Allstate personal financial representative is ready to help you start saving with an IRA.