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 and in generally most or all 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. However, when certain requirements are met, distributions are tax free. You may continue to contribute to your Roth IRA after reaching the age of 70 1/2 years.

• Coverdell Education IRA. It is a great way to save for your kids' education. You may contribute up to $2,000 per year. The taxes on earnings are deferred until the funds are withdrawn. If used for qualified education purposes, the entire withdrawal can be tax free.

• SEP IRA. If you are self employed the Simplified Employee Pension IRA might be the answer for a retirement plan. Your business may contribute up to 25% of your compensation annually, not to exceed $49,000.

If you are starting to prepare your 2009 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.