{"id":1040,"date":"2010-11-17T14:17:20","date_gmt":"2010-11-17T21:17:20","guid":{"rendered":"http:\/\/financegourmet.com\/blog\/retirement\/types-of-iras-guide\/"},"modified":"2010-11-17T14:17:20","modified_gmt":"2010-11-17T21:17:20","slug":"types-of-iras-guide","status":"publish","type":"post","link":"https:\/\/financegourmet.com\/blog\/retirement\/types-of-iras-guide\/","title":{"rendered":"Types of IRAs Guide"},"content":{"rendered":"<p>What is the <a href=\"http:\/\/financegourmet.com\/roth-ira.htm\">difference between a Roth IRA and a traditional IRA<\/a>?<\/p>\n<p>That question about retirement planning is very common. I&#8217;ve written up short answers, detailed answers, courseware, seminars, flyers, tear sheets, white papers, and who knows what else about what a Roth IRA account is versus a traditional IRA account.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" style=\"background-image: none; margin: 10px; padding-left: 0px; padding-right: 0px; display: inline; float: left; padding-top: 0px; border: 0px;\" title=\"ira-types-guide-confusion\" src=\"http:\/\/financegourmet.com\/blog\/wp-content\/uploads\/2010\/11\/ira-types-guide-confusion.jpg\" border=\"0\" alt=\"ira-types-guide-confusion\" width=\"129\" height=\"127\" align=\"left\" \/>Lately, the questions, while similar have gotten more varied:<\/p>\n<ul>\n<li><span style=\"font-size: small;\">What is the difference between a SEP-IRA and a SIMPLE IRA?<\/span><\/li>\n<li><span style=\"font-size: small;\">What is the difference between a Rollover IRA and Traditional IRA?<\/span><\/li>\n<li><span style=\"font-size: small;\">What is the difference between a regular IRA and special IRA?<\/span><\/li>\n<\/ul>\n<p>That last one says to me that somewhere out there, there is a popular financial planning book, <a href=\"http:\/\/financegourmet.com\/index.htm\">personal finance<\/a> speaker, or television show using terminology that is either inaccurate, or poorly understood. Either way, here is a crash course in all the types of IRAs, what they are, how they work, and who they are for.<\/p>\n<h3>Regular IRA Accounts &#8211; Individual IRAs &#8211; Personal IRA Accounts &#8211; Normal IRA Accounts<\/h3>\n<p>Let&#8217;s start at the beginning.<\/p>\n<p>All IRA accounts are, by definition, personal IRA accounts, or individual IRA accounts. There is no such thing as a joint IRA. There is no such thing as an IRA account with more than one owner.<\/p>\n<p>An IRA, according to the IRS, is an Individual Retirement Arrangement. The &#8216;i&#8217; in IRA stands for Individual. <strong>All IRAs are Individual IRAs.<\/strong><\/p>\n<p>There is no such thing as a regular IRA account or a normal IRA account. However, when most people say such a thing, they mean <em>traditional IRA, <\/em>which was the first widely known IRA account to exist, and is thus, often considered &#8220;normal&#8221; or &#8220;regular.&#8221;<\/p>\n<h3>Traditional IRA Versus Roth IRA<\/h3>\n<p>If you want an <a href=\"http:\/\/financegourmet.com\/ira-information-basics-explained.htm\">in-depth explanation of how IRAs work<\/a> then click the link. Otherwise, here is the short, short, version.<\/p>\n<p>A traditional IRA offers (some) people a tax deduction up front when you contribute the money. In exchange, you owe taxes on all money in an IRA when you withdraw it, no matter how old you are.<\/p>\n<p>The same thing applies to 401(k) plans, 457 plans, and 403(b) retirement plans.<\/p>\n<p>A Roth IRA works in reverse. You get no tax deduction for <a href=\"http:\/\/financegourmet.com\/roth-ira.htm\" target=\"_blank\">Roth IRA contributions<\/a> today. However, when you retire, you can take all of the money out of a Roth IRA tax-free, including all interest and capital gains.<\/p>\n<p>If you are licking your lips, then you understand the power of the Roth IRA. Years of tax-free compound interest will generate more money than you could ever possibly save by deducting a few thousand dollars per year on your taxes.<\/p>\n<p>Since no taxes are due on money inside a Roth IRA, the IRS doesn&#8217;t care if you ever take it out, so there are no <em>required minimum withdrawals<\/em>, or RMDs necessary on a Roth IRA.<\/p>\n<p>For traditional IRA accounts, you must begin taking an RMD after age 70 1\/2, until you die.<\/p>\n<p><em><strong>Next: Small Business IRA Plans<\/strong><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What is the difference between a Roth IRA and a traditional IRA? That question about retirement planning is very common. I&#8217;ve written up short answers, detailed answers, courseware, seminars, flyers, tear sheets, white papers, and who knows what else about what a Roth IRA account is versus a traditional IRA account. Lately, the questions, while similar have gotten more varied: What is the difference between a SEP-IRA and a SIMPLE IRA? What is the difference between a Rollover IRA and Traditional IRA? What is the difference between a regular IRA and special IRA? That last one says to me that somewhere out there, there is a popular financial planning book, personal finance speaker, or television show using terminology that is either inaccurate, or poorly understood. Either way, here is a crash course in all the types of IRAs, what they are, how they work, and who they are for. Regular IRA Accounts &#8211; Individual IRAs &#8211; Personal IRA Accounts &#8211; Normal IRA Accounts Let&#8217;s start at the beginning. All IRA accounts are, by definition, personal IRA accounts, or individual IRA accounts. There is no such thing as a joint IRA. There is no such thing as an IRA account with &#8230; <\/p>\n<p class=\"read-more-container\"><a title=\"Types of IRAs Guide\" class=\"read-more button\" href=\"https:\/\/financegourmet.com\/blog\/retirement\/types-of-iras-guide\/#more-1040\" aria-label=\"Read more about Types of IRAs Guide\">Read More<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[301,663,665,425,445,447,448,470,477,555],"class_list":["post-1040","post","type-post","status-publish","format-standard","hentry","category-retirement","tag-ira","tag-personal-finance","tag-retirement","tag-retirement-planning","tag-rollover-ira","tag-roth-ira","tag-roth-ira-account","tag-sep-ira","tag-simple-ira","tag-traditional-ira-account","no-featured-image-padding"],"_links":{"self":[{"href":"https:\/\/financegourmet.com\/blog\/wp-json\/wp\/v2\/posts\/1040","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financegourmet.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financegourmet.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financegourmet.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/financegourmet.com\/blog\/wp-json\/wp\/v2\/comments?post=1040"}],"version-history":[{"count":0,"href":"https:\/\/financegourmet.com\/blog\/wp-json\/wp\/v2\/posts\/1040\/revisions"}],"wp:attachment":[{"href":"https:\/\/financegourmet.com\/blog\/wp-json\/wp\/v2\/media?parent=1040"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financegourmet.com\/blog\/wp-json\/wp\/v2\/categories?post=1040"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financegourmet.com\/blog\/wp-json\/wp\/v2\/tags?post=1040"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}