Are you thinking about saving for retirement with an advantage? If you are, then opening an Individual Retirement Account (IRA) is something that will work great for you and fit the bill perfectly. You might be wondering what is an IRA, the plans available and if it is the right option.

So, what is an IRA?
Individual Retirement Account (IRA) is a method to encourage retirement savings that offers tax advantages. The sooner you start saving for your retirement, the better off you will be! Find below some of the most common and best retirement income plans that are offered by IRA

• Traditional IRA
  With traditional IRA, your tax will be deferred for all the transactions and incomes within the account i.e. you will be paying the tax on withdrawal of money after retirement.
• Roth IRA
  With Roth IRA, you will enjoy a benefit of tax free withdrawal of money after retirement as you will be paying income tax at the time of investment.
• Rollover IRA
  This plan can be set up by you if you wish to receive a distribution from a qualified retirement plan. Moreover, this plan will be an advantage to you as you will be provided with a particular period of time to withdraw from one plan and rollover into another without incurring a penalty
• Simplified Employee Pension (SEP IRA)
  This plan allows your employer to contribute to a traditional IRA setup for you. This plan will be beneficial if you are self-employed or a freelancer as it will allow you to save more money.
• Savings Incentive Match Plan for Employees (SIMPLE IRA)
  This plan allows you and your employer to fund to a traditional IRA setup with lesser contribution limit and simpler management.

With so many plans, offering different features, benefits and margins, choosing the best plan can be difficult. So, before you make any commitments, take some time to consider the factors like the reason why you would want to open an IRA account, the kind of benefit that you would receive on tax, how you would like to use the funds after retirement, will it be easy for you to rollover from one plan to another with comfort, the limitations on the withdrawals after retirement, age etc. Scrutinizing various advantages and limitations will assist you in making an informed as well as a smart decision.