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2. Saving Now For The Future: Individual Retirement Account Contribution One of the best vehicles that can be used to save money for a person's retirement is through an IRA or Individual Retirement Account. Additionally there are two types of IRAs.

3. Types Of IRAs Specifically, those two types of IRAs are a traditional individual retirement account and a Roth IRA. In order to maximize this retirement savings option it is important to know what these two types of IRAs are and how an individual can make a individual retirement account contribution.

4. Two Types Of IRAs When an individual begins to seriously consider their future they may wish to consider the starting of an individual retirement account. Ultimately, they will discover that there are two basic types of individual retirement accounts that can be utilized. Those two different types of individual retirement accounts are the traditional individual retirement account and the Roth individual retirement account.

5. Types Of Individual Retirement Accounts Basically, the two types of individual retirement accounts are the same. However the main difference is the way the individual retirement account contributions are made.

6. Traditional Individual Retirement Account Specifically, the traditional individual retirement account is contributed to with pre-tax money. This simply means that the money is placed into the IRA before any taxes are taken out. This is processed as the individual, on their tax return, indicates the contributions made and that amount is subtracted from the adjusted gross income. On the other hand, the Roth IRA utilizes money that has already been taxed and following that taxation the money is then placed into the Roth IRA.

7. Roth IRA Therefore, when the individual is ready for retirement or early retirement they can begin to withdraw monies from their IRAs. If the individual has chosen to go with a Roth IRA then all of their withdrawals are tax free because they have already paid taxes on those individual retirement account contributions. However, if the individual has chosen a traditional IRA then those withdrawals will be taxed because the individual retirement account contributions were placed into the account without any taxes being taken from those investments.

8. How To Make A Individual RetirementAccount Contribution There are a variety of methods in which an individual retirement account contribution can be made. Some of those methods include an automated withdrawal in which the investor has given permission for the financial institution to draw out a set amount each month at a given time. This particular method of contributing to an IRA is very easy and painless as the individual often doesn’t have to worry about conducting this transaction or remembering to make it happen.

9. IRA The other way that an individual can make an individual retirement account contribution is by giving a lump sum to their IRA management company. However, it is important to remember, in order to take advantage of any tax deductions that this lump sum should be made prior to April 15 of the current calendar year in order to take credit for this IRA contribution in the preceding tax year.

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