Part 2: What Are The Different Types Of IRAs

Good evening Women Supporting Women,

Happy Monday to you!  I hope you all had a great weekend.  Mines was nothing short of FABULOUS!  Saturday, I did a networking event with none other than, one of our favorite bloggers and stylist, Shameeka :-).  The networking and synergy in the room was so peaceful and genuine.  I loved it!  Later on, I also enjoyed all of my kiddies!!!  Yes, my son, along with my 3 bonus children were all with me.  It’s been a while since I’ve had them all at one time, so this was a real treat for me.  Of course church on Sunday as I thanked the man above for my blessings.  My heart was full 🙂

Now onto business.  Last week, we started the series with what an IRA is.  This week’s topic will cover, what are the different types of IRAs.

IRAs: Traditional, Roth, (Simplified Employee Pension Plan (SEP), Spousal and Savings Incentive Match Plan For Employees (SIMPLE)

As you can see there are plenty of IRAs out there. I will break each one down and next week we will talk about the limits.

Traditional IRA –  Traditional IRAs is where IRAs all begin.  With the traditional IRAs, contributions you make may be tax-deductible. If your contributions are deductible, you will be taxed on them when you make withdrawals. The earnings that build on your contributions will not be taxed, until you make a withdrawals. Keep in mind that withdrawals are subject to ordinary income taxes and distributions MUST begin by age 70½.

Roth IRA – Contributions you make into a Roth IRA are NEVER tax-deductible. You will not be taxed on your contributions when you withdraw them. The earnings that build on your contributions will not be taxed at all if you begin making withdrawals after age 59½, and you have waited at least five years since your initial contribution.

SEP IRA –  The SEP IRA is an employer tax deferred retirement plan: allows flexible employer contributions. The business must include all employees who are at least 21 years of age, earned at least $600 and have been employed in three of the five preceding years.

Spousal IRA – With Spousal IRAs, the IRS rules state that a person must have earned income to be eligible to contribute to an IRA, but there’s a workaround for married taxpayers: If one spouse isn’t working — or brings in a very low-income — you can both contribute to your own separate IRAs (either Roth or Traditional).
Couples must file a joint tax return and have taxable compensation to be eligible. Keep in mind, the account can be funded with money from either spouse’s earnings, BUT must be opened in the non working spouse’s name, using their Social Security number

SIMPLE IRA –   A SIMPLE IRA is an employee retirement arrangement featuring a special account or annuity for each participant. A SIMPLE IRA may be established by any business with no other qualified retirement plans in place, and with 100 or fewer employees who earned a certain amount in the previous year (will discuss limits next week). The salary deferral amounts are scheduled to increase in future years. Distributions before the employee’s age 59½ are subject to a 25% penalty tax during the first two years of participation and 10% thereafter, unless specific exceptions apply. The SIMPLE IRA plan only offers a traditional IRA option (no Roth IRAs). However, the employee can convert to a Roth IRA after a two-year holding period required under the Internal Revenue Code.

As you can see, there are a lot of different IRAs.  Look to see which one best suits your situation and start saving towards your retirement today.  You are never too young to begin.

If you have any questions, please post your questions here OR email me at:


Next Up: The Limits for IRAs

Thank you and have a beautiful and blessed week!


Changing the lives in our community….one person at a time



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