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Individual retirement accounts, known as IRAs, are designed to help investors save for retirement. Accounts are set up through a financial institution and are given special tax treatment by the IRS. Unlike a 401(k), an IRA is not tied to an investor’s employer.
Many savings vehicles are designed to help you prepare for one of the biggest financial goals you'll ever have – retirement. Whether this time is just around the corner or still a few years away, let's take a closer look at how individual retirement accounts (IRAs) might meet your needs.
IRAs come in two forms and have different approaches to saving:
IRAs have a few additional differences, but your financial advisor can help you determine which savings vehicle best meets your needs.
401(k)s are pre-tax employer-sponsored retirement plans that are part of an employee's benefits package. Many employers will match your 401(k) contributions up to a certain percentage or dollar amount.
Conversely, you can open an IRA at most investment firms. These accounts are not tied to your employer and are transferable between institutions. IRAs may also allow you more flexibility in your investment choices, since you're able to choose the firm you invest with as well as the types of investments you prefer.
This isn't an either/or proposition. Opening both an IRA and 401k can be part of your retirement savings strategy. Discuss your options with a financial advisor.
Not only can you expect world-class service, but you also can:
To learn more about IRAs in general or discuss holding your IRA at Edward Jones, schedule a conversation with your local financial advisor.
*Early withdrawals are subject to ordinary income tax and a 10% penalty if you take a distribution before reaching age 59½.
**Earnings distributions from a Roth IRA may be subject to taxes and a 10% penalty if the account is less than five years old and the owner is under age 59½.
Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation. This content should not be depended upon for other than broadly informational purposes. Specific questions should be referred to a qualified tax professional.
In many cases, you don't need to choose one over the other – we see value in exploring if an IRA may be right for you even if you already contribute to a 401(k).Read more
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