Advantages and Disadvantages of IRA Accounts
With the tax season just around the corner, you must be in the process of getting your tax return in order. The deadline for 2022 IRA contributions is also coming up, and you have until the 15th of April to make contributions. In case you have no idea where to start when it comes to IRAs or Individual Retirement Accounts, these accounts provide you with a way to plan and save for your retirement.
Every investment has some benefits and drawbacks, and IRAs are the same. Here we will be breaking down the advantages and disadvantages of IRAs.
More Investment Options than 401(K)
Has your employer offered to set up a 401(k) plan for you? Do you have one already? If you already have a 401(K) plan, you must have noticed that there aren’t many options available to you when it comes to deciding how to invest. The high fees are a bummer as well. You must think that IRAs are the same since they are also a type of retirement account. That is a misconception on your part, as IRAs are pretty similar to taxable investment accounts but with all the more investment options.
Flexibility is the Key
IRAs offer you ample flexibility compared to 401(K) investments. Roth IRAs allow you to withdraw the contributions you make to it before time if you want without any additional taxes or a penalty. However, the income tax still has to be paid and a 10% penalty on earnings you withdraw before retirement.
On the other hand, traditional IRAs offer more liquidity; you have to pay additional penalties and taxes over and above the early takeout penalties. If you have a traditional IRA, you can convert that into a Roth IRA to enjoy better liquidity options or even go for a gold and silver IRA account.
Self-directed IRAs (SIDRA) offer you more freedom, greater control, and better diversification options regarding your investments and retirement savings. In SIDRA, you are not restricted to investing only in stocks, bonds, or investment funds but can also invest in metals.
All IRAs offer protection of assets from creditors under the bankruptcy rule up to one million dollars. However, the protections of each state are different, so you need to conduct thorough research before making an investment decision.
The disadvantages of IRAs are:
The rule of strict contribution limits applies when it comes to IRAs. For instance, one of the partners, i.e., you or your spouse, need earnings. For 2022, the maximum contribution a person can make in an IRA is $6,000. In contrast, for those over 50 years of age, the limit of catch-up contribution is $1,000.
With IRAs, the benefits far outweigh the drawbacks. Orion Metal Exchange is one of the top gold IRA companies having an excellent performance history in gold and silver IRA accounts. Get in touch with us at 1-800-559-0088 to learn more about what we offer. Alternatively, you can also send us an email at email@example.com.