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FAQs about IRAs

Home Blog FAQs about IRAs


An IRA is an individual retirement account that is used as a tool for people to earn and earmark funds for retirement savings.  Retirement may seem far away, but the earlier you start to save, the better off you’ll be! You have flexibility when choosing investments and minimizing taxes, which means an IRA can play a huge role in how prepared you are for retirement.  With that said, many people don’t fully understand how IRAs work. They can be confusing. As a result, there are many questions that arise when talking about IRAs.

Here are a few:

  1. What is an IRA? – In simple terms an IRA is a trust that is established with certain tax rules.  More specifically, it’s a security blanket for your money. CD accounts, money market accounts, savings accounts, and brokerage accounts can be IRAs.
  2. Who can open an IRA? – Generally, anyone under the age of 70 who earns a taxable income can contribute to a Traditional IRA. Roth IRAs, however, have additional income restrictions.  Anyone can contribute to an IRA if they have earned income from a job, but they cannot contribute more than that income.
  3. How do I open an IRA? – If you don’t already have an employer-sponsored retirement plan, you can choose to open an IRA. You can go to banks, credit unions, brokerage firms, or mutual fund companies.  It never hurts to do more research and ask questions.
  4. Am I able to contribute to someone else’s IRA? – Yes, but only if it is your spouse and if you file a joint tax return.
  5. How do I invest into my IRA? – Fortunately, an IRA gives you the option on how you want to invest your money. That includes stocks, bonds, mutual funds, or deposit accounts.  You can invest how you want or you can have your IRA managed for you by a financial professional. IRAs do have annual contribution limitations.

IRAs can be a tricky subject, but hopefully with the answers to these frequently asked questions we were able to help you with some beginner’s knowledge. If you have more questions or are wanting to set up an IRA, we would be happy to help. Contact us today!


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