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Bellingham Retirement Planning

Opening an IRA Bellingham retirement planning account is a good way to plan for your future. Time tends to pass much more quickly as we age and if you don't start planning when you are young, you will be unprepared when it is time for retirement. While many people rely on pensions or 401k accounts for their Washington retirement planning, an IRA is also a good idea. This sort of WA retirement planning account can be opened in addition to or in lieu of one or both of the other account types. Regardless of which type you choose, it is important to begin planning for your Bellingham retirement sooner rather than later so that you are ready no matter what.

What is a Roth IRA?

The most common type of Bellingham retirement planning IRA account is a traditional one. This is a basic account that acts as a sort of investment and savings hybrid. For the most part, it is very simple, which is why it is the most common. Second in commonality to the traditional IRA Bellingham retirement planning account is known as a Roth IRA retirement planning. The biggest difference between a Roth IRA Bellingham retirement planning account and a traditional IRA planning account is in the tax breaks. Traditional IRA's earn tax breaks up front (in other words, you get a break in taxes when you invest the money).

A Roth IRA Bellingham retirement planning account works a little differently. With a Washington Roth IRA, you invest the money now, after you pay taxes on it. That is to say, you earn the money, pay taxes on it, and then put it into your IRA account. However, when you retire, you are not taxed on the withdrawals you take from the Roth IRA Bellingham retirement planning account.

This works differently than a Bellingham traditional IRA. With the traditional account, you pay taxes when you withdraw funds. It acts similarly to a paycheck. The check is cut, the taxes are taken, and then you get the rest. The opposite occurs with a WA Roth fund. This is beneficial because your budget will most likely be more limited when you are retired, and this Bellingham IRA account will assure that you get more out of each withdrawal than you would with a traditional IRA (keep in mind, though that you get more tax breaks on the front end of a traditional IRA, so that is something to consider when deciding which account type is right for your Bellingham retirement planning needs).

Benefits of a Roth IRA

The biggest benefit of a Bellingham Roth IRA account is that for certain qualifying events, you are allowed to withdraw funds from it without penalties before you retire. There are several events that are considered qualifying. First, if you are paying WA college tuition for yourself or an immediate family member, you will not pay a penalty for pulling said funds form your Roth IRA Bellingham retirement planning account. Also, if you have suddenly become disabled and need the funds to support yourself you will not be penalized. In addition, you can pull up to $10,000 out for use in the purchase of your first Washington home. Perhaps most importantly, you can use the funds if you incur medical costs that exceed seven and a half percent of your gross income (adjusted). All of these are considered qualifying events and you will not be penalized for making withdrawals for said events.

That is not to say that you will not have to justify your withdrawal. When dealing with taxes, we are dealing with the government and if they are not getting paid, they will want to know why. Your Bellingham investment firm or portfolio manager will know the proper procedure for making early withdrawals, so consult with them before you do anything. Be sure to complete any paper work you are given in a timely fashion. This will help to belay any issues that might arise, as well as ensure you have plenty of time to jump through any additional hoops that might come up in the process.

The reasons above are not the only times you can withdraw money from your Bellingham Roth IRA retirement savings account. You are typically allowed one "freebie". What this means is that you can take back one deposit anytime for any reason. For example, say you receive a bonus at work, and at the time you do not need the cash so you deposit the full $10,000 into your Roth IRA. Two weeks later, your car breaks down and you need $2,000 worth of repairs. One time only, you can take that $10,000 back out of the Bellingham retirement planning account without incurring any fees.

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