Individual Retirement Accounts

IRA Accounts from Go Energy Financial

Whether retirement is just around the corner or farther in the future, you can save now to better afford making your retirement turn out just as you imagine it.

Go Energy Financial offers Individual Retirement Account options to meet your retirement needs and an IRA-like account that allows you to contribute toward a child’s education. These accounts have varying tax implications, so it’s always best to talk to a tax advisor before funding an IRA. We can help answer questions, too! Tax advisors don’t get to have all the fun.

Here are a few brief descriptions to get started.

Traditional Individual Retirement Account

You can open and deposit into a Traditional IRA on your own, without any employer participation, until you reach the age of 70½. These contributions are tax-deductible and all interest is tax-deferred, meaning you won’t pay those taxes until you withdraw funds after retirement.

If something happens, you may dip into those funds before you turn 59½, but a 10% early distribution penalty may apply. This penalty doesn’t apply if you withdraw funds for major life events, such as disability, unemployment, a qualifying first home purchase, qualifying education expenses, death, or receiving your IRA assets in equal payments over your life expectancy after age 70½.

Roth Individual Retirement Account

A Roth IRA is not tax-deductible (contributions are with after-tax dollars), but it offers tax-free growth and tax-free withdrawals in retirement. You can withdraw funds from principal contributions at any time, tax-free. The interest you earn, however, will not be tax free until you are over the age of 59½, have held the account for at least five years, or have a qualifying reason. Unlike a Traditional IRA, there is no limit on how long you can pay into a Roth IRA and you will not be required to take payments at age 70½.

Coverdell Education Savings Account

When it comes to preparing a child in your life for education expenses, contributing to a Coverdell ESA is a great first step. You can open this ESA for any child under the age of 18. Contributions can be made by anyone in that child’s life up to a collective total of $2,000 each year until the child turns 18.

Coverdell ESA funds can be withdrawn to help pay for college expenses like tuition, books, room and board for full-time students, and more— even some K-12 expenses may qualify. If the recipient decides not to attend college, then that child will need to withdraw all of the funds by his or her 30th birthday to avoid penalties.

What’s Next?

We mentioned before that IRAs and ESAs have varying tax implications. Our summaries are just the beginning, so please talk to a tax advisor. We’re here to answer questions, too, and we’d love to talk with you!