Monday, January 07, 2008

Individual Retirement Account - IRA

I collected some information about IRA. It may be useful to anyone looking for the information.


IRA - Individual Retirement Account is something like tax benefit account other than 401(k). If you already have 401(k) available in your organization then it is better to avail that.


If you want to have a replacement for 401(k) then you can go for IRA. IRA has different schemes. One type is having almost same benefit as 401(k) i.e. pre-tax. Another type is having benefit on after-tax assets. One advantage you have through IRA is - you can invest the money in that account in stocks, MFs, houses and other asset building activities.

One can operate this account even they return to their home country. But to start the account, SSN and/or US address is required. It has 58.5 years as age limit for maturity. Even one can withdraw the amount before that with penalty. One can use IRA to save amount for non-salaried person also.


Good banks in which you can start are Charles Schwab(http://www.schwab.com/) or Fidelity (https://www.fidelity.com/)


Better to ask about everything - i.e. benefits of different types, if you move to your country what is the procedure to get the money, what is the procedure for pre-closure, how to use the money for stocks/MF, etc., what is the maximum amount you can invest to avoid taxes.


Wikipedia link to IRA - http://en.wikipedia.org/wiki/Individual_retirement_account


In Indian context - To have better understanding - Equivalent of 401(k) is PF. Equivalent of TRA is PPF.

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