The Jarrettsville Federal Blog

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by Nancy Dorn, Senior Vice President, Bank Operations

Does it make sense to invest your money in an Individual Retirement Account (IRA)?    If your employer does not provide a 401 (k) plan or a similar type of retirement plan, a traditional IRA will allow you to make contributions with money that may be deductible on your tax return.  Any earnings potentially grow, tax-deferred, until you withdraw them in retirement.  It’s a long-term savings solution that may potentially yield a better return the longer you keep your money in it.   Timing of IRAs can range anywhere from 12-month to 72-month at Jarrettsville Federal, and you can contribute up to $5,500 (or $6,500 for savers over age 50) in earned income to your IRA each year.  Even if you don’t make a contribution, the IRA stays open.

Anyone can own a traditional IRA or combination of IRAs, including minors, non-working spouses – provided the other spouse has earned income – and senior citizens under the age of 70 ½.  Individuals over 70 ½ years old cannot continue to contribute to a traditional IRA, as they are required to start withdrawing.  The money you put into an IRA must be earned income, and it is deferred from taxes until the time you withdraw.  Therefore, many people turn to IRAs to help reduce their taxable income. 

Be sure to ask your tax preparer if an IRA might be right for you.  Only a traditional IRA may be tax deductible.  A Roth IRA contribution is money that has already been taxed, and has other restrictions.  Be sure to specify the difference.  If you qualify, an IRA contribution can be a smart way to lower your taxes this year.  Taxpayers have until April 18, 2017, to make a contribution and apply it to tax year 2016.  

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