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IRA Legacy Planning

What is an IRA?

An IRA stands for individual retirement account. This account lets you save money for retirement in a tax-advantaged way.

An IRA individual retirement account is set up at a financial institution and lets an individual save for their retirement on a tax-deferred basis or with tax-free growth.

There are three types of IRA accounts:

  • Traditional IRA – This account consists of money you put in that you can deduct on your tax return, as well as any income that can grow tax deferred until you take it out during retirement. A lot of retirees end up in a lower tax bracket than when they were working; this means that the taxdeferred money may be taxed at a reduced rate.
  • Roth IRA – This account is where you place after-tax money (income that has already been taxed) that can grow tax free and provide tax-free retirement withdrawals if the required conditions are met.
  • Rollover IRA – This traditional account is where you put money that has been “rolled over” from a qualified employer-sponsored retirement plan like a 401(k) or 403(b).

The tax benefits from a Traditional and a Roth IRA individual retirement account give your savings the opportunity to grow or blend much quicker than they would in a taxable account.

Why choose an IRA?

It’s been estimated that you’ll need 85% of your pre-retirement income during retirement. And while employer-sponsored plans like a 401(k) can help, they might not accrue the amount of savings you’ll need. The good thing is that you can put money into both a 401(k) and an IRA individual retirement account.

An IRA can assist you with:

  • Adding to the savings you have in your employer-sponsored account.
  • Providing more access to multiple investment options.
  • Making the most of tax-free or tax-deferred growth.


To get the most out of your savings, you should put the maximum amount allowed into your IRA each year. It’s also wise to keep up with your investments and change things as needed once you get closer to retirement and your life goals switch focus.

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