Retirement Planning/not sure


hi..i just have a question. i am not clear on this subject at all. suppose you have a tradition ira or a roth ira for your retirement. i will also retire in less then 2 years, but have only a saving account which i am putting as much money into as possible. what difference does it make if i do that, or get an ira or something like that? what does an ira do that simply putting cash in a saving account wont do? thank you!

Hi James,
The main differences between an IRA and a savings account are the tax treatment and where your money is invested. In a traditional IRA, your contributions are tax deferred so you don't pay tax on the money that goes in but you will be taxed as ordinary income when you start to take withdrawals. Any amount you put in is removed from your income for the year so you don't pay tax on it at the time. A Roth IRA is funded with after tax money but the withdrawals are tax free. In a savings account the money you put in has already been taxed but you will owe tax on interest earned.
Either kind of IRA will also allow you to invest the money in almost anything such as stocks, bonds, annuities, precious metals and many other types of non traditional investments. In a savings account, you will only earn the interest that current rates allow for. I hope this helps. Good luck!


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David M Iannopollo


I am a professional financial advisor who can assist you with answers on mutual funds, annuities, IRA's, rollovers, qualified and non-qualified retirement plans, retirement planning, educational planning, life, disability and LTC insurances. I can also show you how to take advantage of the stock market gains without the risk of loss!


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