What IRA is Best for Me?

When it comes to saving for retirement, Individual Retirement Accounts (IRAs) offer a range of options to suit various needs and preferences. However, the choices can be overwhelming for the everyday consumer. Whether you have been saving for years or are just beginning to plan your future, SouthStar Bank can help you get started.

Roth IRA: 

A Roth IRA is a retirement account funded with after-tax contributions. One of the main advantages is the potential for tax-free growth and withdrawals during retirement. With a Roth IRA, contributions are made with money that has already been taxed, which means you won’t get an immediate tax deduction. However, the earnings within the account grow tax-free, and qualified withdrawals, made after age 59 ½ and held for at least five years, are also tax-free. Additionally, Roth IRAs do not have required minimum distributions (RMDs) during the account owner’s lifetime, giving the account owner more flexibility in retirement planning.

Traditional IRA: 

A Traditional IRA is a tax-advantaged retirement account where contributions may be tax-deductible in the year they are made. The money you contribute to a Traditional IRA is not taxed until you withdraw it during retirement. While the contributions and earnings grow tax-deferred over time, withdrawals made after age 59 ½ are treated as ordinary income and taxed accordingly. Another key aspect of Traditional IRAs is that they come with required minimum distributions (RMDs) that must begin at age 72 (73 if you reach age 72 after Dec. 31, 2022), ensuring gradual distributions during retirement.

Self-Directed IRA: 

A Self-Directed IRA is a unique retirement account that allows investors to go beyond traditional assets like stocks and bonds. With a Self-Directed IRA, you have the flexibility to invest in alternative assets, such as real estate, precious metals, private equity, and more. This option empowers investors to diversify their portfolio beyond conventional investments, potentially enhancing returns and reducing risk. However, it requires diligent research and understanding of the chosen alternative investments, as they may not be as liquid or easily valued as traditional assets.

Checkbook IRA (Self-Directed IRA with Checkbook Control): 

A Checkbook IRA, also known as a Self-Directed IRA with Checkbook Control, is a specific type of Self-Directed IRA that provides even greater control and convenience in managing investments. With a Checkbook IRA, you establish an LLC (Limited Liability Company) owned by the IRA, and the IRA custodian allows you to serve as the manager of the LLC. As the manager, you gain the authority to make investment decisions and write checks from the IRA’s funds directly, eliminating the need for custodian involvement for each investment transaction. This streamlines the investment process and can be especially beneficial for those who prefer a hands-on approach to managing their retirement funds.

SouthStar Bank is excited to offer a variety of IRA products, including IRA loans, to the Texas communities we have served for over 100 years. Our knowledgeable team can guide you through the process of selecting the right IRA for your retirement goals and provide personalized assistance to help you maximize your savings.

For more information or to inquire about IRA accounts, please contact SouthStar Bank at ira@southstarbank.com or reach out to your local branch.