What You Need To Know About Your IRA
There are a couple of different types of IRAs available. This is because regardless of the type of employment you have, you can open an IRA to stash the money that you have earned from such things as stocks and real estate in.
A Roth IRA offers you a lot of flexibility and $110,000 as a single person or $160,000 as a married couple is tax-free. This can be withdrawn without any tax penalties once you have retired or after 5 years, whichever comes first. However, if you withdraw from a Roth IRA early on you are going to face penalties of at least 59.5%. You can contribute up to $4,000 do your Roth IRA per year but this may be limited if you also have a SEP IRA.
A SEP (Simplified Employee Pension IRA) IRA is another type of IRA. This is the type of IRA that your employer will use if they are going to contribute money to your retirement plan through. However, you do get to decide where you want to invest this money. Unfortunately, if your company is going through a difficult time they are not required to contribute to your IRA during that year. On the other hand, in good years employers generally place 25% of your pay or $44,000, whichever is less into your SEP IRA. Another drawback here is that you cannot directly deposit money into this type of an IRA.