An Ira is one of
greatest ways to save on taxes currently and accumulate money for future.For individuals three types of IRA's will normally come under consideration.
The Traditional or Regular IRA The Education IRA The Roth IRA
Education IRA is now called Coverdell Education Savings Account (ESA).
Education IRAs allow you to save for qualified higher educational expenses for a beneficiary. Parents and guardians are allowed to make nondeductible contributions to an education IRA for a child under age of 18.
Contributions are allowed prior to beneficiary turning 18, and contributions may not exceed $2,000 per beneficiary per year.
Contributions are made with after-tax dollars. There is NO deduction for contribution. Withdrawals, however, are tax- and penalty-free when adhering to certain rules.
The traditional IRA allows you to contribute an amount and take a current deduction for contribution. Withdrawal minimums must begin at a certain age and all withdrawals are taxable at rate applicable when withdrawals are made. The main benefit is that any growth or gains remain free from taxation up to point of withdrawal. Thus you would be getting tax-free accumulation.
The Roth IRA is perhaps simplest - and potentially most effective - sheltered account available.
Roth IRA has a tax structure different from any other IRA: contributions are after-tax (no deduction is available) but growth is tax-free; AND once you put your money in you NEVER pay taxes again.
