WHERE DO YOU WANT YOUR MONEY TO TAKE YOU TODAY?
Table 14.4. Limits
INDIVIDUAL RETIREMENT ARRANGEMENTS
Most people are familiar with individual retirement arrangements, or IRAs. However, they may not be as familiar as they should be. An IRA is a powerful tool that will help you save money for your retire- ment, as well as shelter some of your money from taxes. Similarly, many people assume that an IRA is a specialized type of investment, perhaps a specific mutual fund or stock in which all IRA owners are invested. Not so. An IRA is strictly a type of account; it’s a category of accounts, not a specific investment. In fact, an IRA can hold stocks, bonds, real estate, annuities, or any type of investment you can think of. The types of IRAs, including the traditional and the Roth, are designed to promote retirement saving. With the introduc- tion of the Roth IRA in 1998, retirement saving got a real boost because the Roth offers specialized tax features that no other type of retirement account does. Until recently, the annual contribution limit was $2000. This really didn’t allow the IRA accounts to show a great deal of growth over time, even with the bull market we experienced in the late 1990s. Now, Congress has agreed to increase the contri- bution limit, which will help those who contribute to IRAs to see a quicker increase in their savings.
Traditional IRAs Traditional IRAs may be opened by anyone, regardless of whether the person has a retirement plan established at work. These IRAs are very common, and although they share some of the same char- acteristics as other IRAs and retirement accounts, they have one