Of the many investment options, an IRA offers a safe, growing retirement fund.
There are two IRA options — the standard IRA and a Roth IRA — and it's important to understand how they work with taxes.
Traditional IRAs can lower your current tax bill because your contributions are fully tax deductible. You only pay taxes on the money when you start making withdrawals at age 70 and a half.
Roth IRA contributions are made with money you've already paid taxes on. That means when you withdraw money at retirement, you pay no taxes.
You can also access your contributions at any time with a Roth IRA, while they aren't accessible in a traditional IRA.
Why? Because you contribute after-tax dollars to a Roth IRA and your money grows tax-free. You could withdraw contributions to a Roth to use as a down payment on a house, for example. One restriction: You can't withdraw earnings on your contribution until age 59 and a half. If you have contributed $10,000 to your Roth and the balance is $10,800, you could withdraw $10,000 for a down payment, but the $800 stays in the account.
Both the Roth and traditional IRA have some restrictions. Talk to your investment advisor for more details.