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Understanding IRAs 

BECU Investment Services

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An IRA (individual retirement account) is a tax-advantaged account that helps you save for retirement. Before you open yours, take note of a few key differences between the types of IRAs out there. 

A Traditional IRA defers taxes on your contributions until you withdraw them upon retirement. Contributions may be tax-deductible if you don't have access to a company-sponsored 401(k). But if you do, Traditional IRA contributions are only deductible to a certain amount then phased out.

With Roth IRAs, contributions are not tax -deferred, meaning you must pay taxes on income earned before you invest in a Roth IRA. However, you may withdraw Roth contributions without paying taxes or penalties at any age for any reason. And you aren't required to make required minimum withdrawals from a Roth IRA upon retirement.

The annual contribution limit for a Roth IRA is the same as a Traditional IRA, but not everyone is eligible to contribute to a Roth plan. Your qualification depends on your annual income and whether you file taxes as part of a married couple.

Regardless of which type sounds like the best fit for you, opening an IRA has a list of potential advantages. Here are just a few:

  • Investing for your future: An IRA can be an effective way to save for retirement. 
  • Enjoy potential tax benefits: In both traditional and Roth IRAs, the growth of the investments in your IRA is tax-deferred, meaning you owe nothing on the gains as long as the money remains in the IRA.

  • Build beyond your 401(k): IRAs allow individuals to contribute up to $6,000 per year ($7,000 if you're age 50 or older); that's on top of what you can invest annually in your 401(k) or other employer-sponsored retirement plans. Note that tax contributions are only tax deductible within certain income limits. 

If you have an existing IRA, don't forget to make your 2019 contribution: April 15 is your deadline.

To get started with an IRA, contact the financial advisors at BECU Investment Services. They can provide additional guidance on your IRA options and tax implications, and walk you through the process step by step. Click here to set up a complimentary consultation, or call 206-439-5720. 

The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Financial Advisors are registered with, and Securities and Advisory Services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC. Insurance Products offered through LPL Financial or its licensed affiliates. BECU and BECU Investment Services are not registered broker/dealers and are not affiliated with LPL Financial. Investments are:

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BECU Investment Services Corporate Office located at BECU, 12770 Gateway Dr., Tukwila, WA 98168. BECU, BECU Investment Services and LPL Financial are separate entities. 

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