Michael Ecke is a mortgage professional - NMLS # 1439805, entrepreneur, businessman, and founder of Prosperment. As a current employee of a Fortune 50 company, Michael is dedicated to ensuring the utmost attention to detail and quality control. Michael provides executive oversight and direction to Prosperment and its sister companies. Michael brings to his position the business foresight and acumen required as Prosperment continues its remarkable growth.
An IRA is an individual retirement account that comes with tax benefits to help you save for retirement. The specific tax benefit depends on the type of IRA: Roth or Traditional. IRAs are one of the most effective ways to save for your future.
To be clear an IRA is not an investment itself. It's an investment account you set up at a brokerage firm or other financial institution. People add money to the account over time and use it to purchase investments - stocks, mutual funds, & bonds - that are held in the IRA account. At retirement the money in the IRA account can be withdrawn to provide income.
What are IRA benefits?
The main perk of a traditional IRA is that contributions are tax-deductible up to current IRS limits, which means contributing to an IRA can reduce your annual tax liability. Here are some other IRA perks:
How to select the right IRA?
There are two main types of IRAs: The Roth IRA and the traditional IRA. The primary difference between the two relates to the tax breaks these account offers.
The money you contribute may be deductible from your taxes for the year. A traditional IRA may be a good choice if you think your current tax rate is higher than the tax rate you’ll face in retirement. That way you get the tax break when it benefits you the most.
Contributions are made with after tax dollars, meaning you can’t deduct them from your taxable income. The payoff of contributing to a Roth is in retirement your withdrawals are not taxable at all. A Roth IRA may be a good choice if you’re in a lower tax bracket now than you’ll likely be in the future.
These aren’t the only differences between these account types, however.
Note that not everyone is eligible for both account types. Eligibility to contribute to a Roth IRA is based on income — only those below a certain threshold are permitted to fully or partially fund an account. Anyone can contribute to a traditional IRA, but the amount you’re allowed to deduct may be limited by your income and whether you or your spouse has access to a retirement plan at work.
When should I start?
Start contributing to an IRA as soon as possible, if you can take a time machine back to when you made your first dollar and start to contribute, then you hit 88 MPH and do it!
Where do I get an IRA?
IRAs can be opened at most financial institutions online or in person. That includes banks, credit unions, brokerage firms, robo advisors, and new micro investing Apps.
Questions to Ask Providers:
Consistent saving coupled with a reasonable rate of return over a long period of time could put you in the millionaires’ club. At the least, it will help you pay the bills when you decide to retire.
Prosperment recommends the Financial Institutions below to get started with an IRA.