For Whom are IRAs recommended?


You probably have heard the term before – IRA. So, what exactly is an IRA and who is it recommended for?

An IRA is an Individual Retirement Account. This account is used by most as a place to save away money for the future. The most basic and fundamental purpose of the IRA is to provide those wanting to save for retirement with an effective, safe, and tax-light way of doing so.

There is no one, single form of an IRA account. There are many providers and many types of IRAs, each with its own particular set of parameters. In order to know which type of IRA might be right for you, understanding the basic parameters of some of the most common types is a great start.

Traditional IRA

This is a basic savings account for anyone with taxable income. Earnings here are tax-deferred until withdraw. Withdraw must begin prior to age 70 ½ to avoid a large penalty. Also, contributions cannot deposit to account after age 70 ½. Because of such age limits, this IRA is better for younger and middle-aged adults.

Roth IRA

Roth savings contributions are not tax-deductible. However, benefits include tax-free compounding, and tax-free withdraw after age 59 ½ and five years of account existence. Contributions to the Roth may also take place after age 70 ½. As the Roth’s rules become more beneficial with client age, Roths are more recommended for middle-aged to older clientele.


SIMPLE IRAs are designed specifically for small businesses of less than 100 employees. Employees elect to defer a certain percentage of their pay to the account and typically, the business matches the contribution. Age and other qualifiers are controlled by the business and financial institution. These are usually much cheaper to administer for businesses than similar 401K and 403b plans. SIMPLE IRAs can be great for anyone. Compare such a plans individual stipulations with your life, goals, and age to be sure.

Spousal IRA

The Spousal IRA is designed to allow one to contribute to the IRA of their retired or non-working spouse. This is actually an allowance of the Traditional IRA and is therefore governed by Traditional IRA parameters. This IRA is most beneficial to younger and middle-aged clientele because of its classification as a Traditional IRA.

Inherited IRA

The Inherited IRA is either a Traditional IRA or a Roth IRA that is setup for inheritance by a particular beneficiary. The beneficiary in this plan cannot be a spouse, however. The worth of this IRA must then be distributed incrementally over the recipient’s lifetime. Additionally, it cannot be rolled over into their own, separate, pre-existing IRA. Inherited IRAs can be great for anyone in such situation, but check all proposed stipulations against your life and needs first.

Education IRA

As its name implies, the Education IRA is built around a child beneficiary’s future educational funding needs. Each year, up to $2,000 can be placed in the account. Tax-free growth and withdraw are applied to educational expenses. The beneficiary must have received the benefit of payout by the age of 30. This IRA is recommended for those of the earliest juncture in adulthood and parenthood, as time will be needed for substantial accumulation of monies.

These are just some of the most common forms of IRAs, as many others forms do exist. If you have taxable income, you can setup an IRA. What your goals are for the money and its beneficiary will most likely determine which type of IRA would be recommended for you. As with any financial arrangement, understand the full spectrum of parameters, rules, or regulations of the IRA you may be interested in before signing on.

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