IRA, Not Just an Uncle in Florida
As the great Leroy "Satchel" Paige once said, "Age is a question of mind of matter. If you don't mind, it doesn't matter."
While that's a wonderful sentiment, it's a lousy retirement plan. Even though Individual Retirement Accounts aren't nearly as snazzy as Satchel was, they can be a valuable piece of any retirement plan.
The best way to fund your future through an IRA is to make regular contributions throughout the year. Let's face it though, as a small business owner or entrepreneur your plate is always overflowing and it's easy to put long term plans at the end of your to-do list.
Fortunately, even if you haven't gotten around to working on your retirement fund there is still time. The deadline for contributing to your IRA it tax day, April 15, 2016. Heck, you can even open an IRA account on the 15th and the contribution counts for the previous year!
TRADITIONAL OR ROTH IRA?
Traditional IRAs are made with before-tax dollars and contributions may be tax-deductible. There are no income limits on contributions and your earnings grow tax-deferred. All distributions are treated as ordinary income and therefore may be taxable when withdrawn.
Roth IRAs are made with after-tax income and contributions are therefore never tax-deductible. Contributions are limited by income caps and your earnings grow tax-free. Qualified distributions are tax-free, including distribution of earnings.
Which one is better for you? It depends on your situation, but for many people Roth IRAs are the better choice because they offer possibly higher tax breaks and more flexibility in withdrawing funds. Your accountant can help you decide which is the best fit.
Saving consistently can help ensure you're able to pay your retirement bills. An IRA is a great tool, but it may not necessarily be your best savings strategy. It's always a good idea to talk to your accountant for advice!