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7 Things to Know About IRAs


2. Save Smart, Avoid Taxes.

A great thing about investing with IRAs is that you can have great benefits throughout the years based on what you give in to your IRA. The benefits obviously can be seen in your annual report and long-term outlook, but one hidden benefit that many tend to overlook is from taxes. Every year when you submit your taxes, there are certain things you pay for and certain things you do not. When you put into an IRA, you actually are given a great reprieve in that the amount of money you invest is actually subtracted from your tax liability. This is a traditional IRA and while being taxed every year may not seem like much in the short term, over the course of 40 years of working you could save upwards of $300,000 just by avoiding taxation if you give the greatest amount allowed every year. The trick of this is when you take the money out, which is when you will see the taxes, but it is unlikely that you will accrue as much as you will save in the long run.

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