From the course: Financial Basics Everyone Should Know
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Using Roth IRAs and SEP accounts
From the course: Financial Basics Everyone Should Know
Using Roth IRAs and SEP accounts
- [Instructor] Many people take advantage of IRAs and SEP accounts for their investing needs. Let's start by talking about traditional IRAs. An IRA is an Individual Retirement Account. With traditional IRAs, these are tax-deductible investments and then the withdrawals in retirements are taxed. In an IRA, anyone can contribute up to $5,500 per year or $6,500 if you're over the age of 50. The money grows tax-free. Importantly, you can contribute to both your IRA and a 401K. If you're not covered by a retirement plan at work, you get the full tax deduction no matter what your income is, unless you file jointly with a spouse who has a retirement plan at work. If you are covered by a retirement plan at work, to deduct your IRA contributions from your taxable income, you must make less than $71,000 annually for single filers or $118,000 for married filing jointly. These figures change over time, so be sure to check the most recent levels from the IRS when you're applying this to your own…
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