Learn About IRA and its Benefits - as part of the expert series by GeoBeats. Carol Friedhoff: An IRA is something called an Individual Retirement Account. And actually there’s two type of IRAs. There’s a Roth IRA and there’s a Traditional IRA. The nice part about the Individual Retirement Accounts is money that you can put aside, and it’s separate from what the money you’re putting in a company plan. The nice thing is, that with the IRA, you can invest in anything you want. Normally with a company plan, you’re limited to the investments that they offer. So, this rule of thumb would be, get as much matching as you can with your employer, then possibly have other money put into the IRA to make up 10% in savings. If you have a Traditional IRA and your income is low enough or you’re not contributing to a company plan, you can deduct that from your income tax. But I love the Roth IRA because any money you put in you can take out at any time, and after you’re 59 and a half, you never pay taxes on it again. And nowadays, the government, or Congress, has changed legislation so you can actually convert some of your IRAs to the Roth. So, there’s pluses and minuses with each of them, but both the Roth and the IRA could be treated almost as an emergency fund because you could get access to it. With the Traditional there’s a 10% penalty if you don’t use if for things like buying your first home or paying for tuition.
