Does an IRA Make Sense For You?

If you have money that you can afford to invest for the long term, there is really no reason not to open an IRA. The Individual Retirement Account brings together two extremely compelling benefits: compound interest and tax savings.

Planning for a comfortable life style in those golden years? Saving for a child's education? Have you recently changed jobs and need to convert a 401k? Are you self employed and need to set up a retirement plan? There is an IRA that will fill the bill:

• Traditional IRA. This is the original and is available to those under 70 1/2 years and have had earned income. You may contribute up to $5,000 per year if under 50 and $6,000 per year if over. Generally most or all of the contribution is tax deductible*. Taxes on contributions and earnings are not assessed until funds are distributed.

• The Roth IRA. The contribution limits are the same as with the Traditional IRA, but they are not tax deductible and you may contribute beyong 70 1/2 years of age. Generally distributions of contributions and earnings are tax-free*.

• Coverdell Education IRA. It is a great way to save for a child's education. Contributions may be made per child up to $2,000 per year. Used for qualified education purposes, the entire withdrawal may be tax-free*.  These funds must be used by age 30 or transferred to another individual*.

• SEP IRA. If you are self-employed or an employer that wants some tax breaks* the Simplified Employee Pension IRA might be the answer for an employee retirement plan. Corporations may contribute up to 25% and Sole Proprietorships 20% of your compensation annually, not to exceed $49,000.

If you are starting to prepare your 2010 taxes, it is a good time to visit your local Riverview branch office to see if there is an IRA that makes sense for you.

* Always consult your tax advisor.