An IRA is a tax-sheltered retirement account for individuals. For certain people, it can be an excellent way to save for retirement because, when used correctly, it can help you pay less taxes on the money you invest in them. It may be used instead of, or in addition to, another pension or retirement plan you have, to increase your retirement savings. It is especially useful to customers who are not covered under a retirement plan where they work. It may also be used by parents as a college savings plan.
This IRA account lets you invest and grow pre-tax dollars, and withdraw them at retirement, at which time you pay taxes on both the principal and earnings. The purpose of this account is to enable you to delay (defer) paying taxes on your investment from now (when your tax bracket is high) to retirement (when your tax bracket is low)—thus reducing your taxes. If your tax bracket will not be lower at retirement than now, this IRA will not reduce your taxes. If you will need this money before retirement, this is also not for you, since there is a substantial penalty for early withdrawal. There are many rules and restrictions, you may want to consult a tax advisor.
This account lets you invest after-tax money, which then grows tax-deferred until retirement. (It allows tax-free withdrawals for certain distribution reasons after a five-year holding period.) Roth IRAs make particularly good sense if you expect to be in a HIGHER tax bracket when you retire than you are now when you make your investments. Like all IRAs, there is a substantial penalty for early withdrawal.
Education IRAs allow you to save money for future education expenses of a designated beneficiary, usually a child or grandchild.
*This calculator is to be used for estimation purposes only. Years to reach saving goals are based on interest compounded monthly. We are showing you your potential account balance based on the amount invested, selected interest rate and length of time you choose to grow your savings. Since it is up to customers to correctly input rates and terms the financial institution is not responsible for its accuracy and the results are not guaranteed.
**Rate changes weekly. Interest credited monthly. Average daily collected balance method used to calculate interest. For current rates, contact your local Pinnacle Bank today.