Company pensions are mostly a thing of the past these days, leaving consumers largely responsible for their own retirement planning. Along with employer-based 401 (k) and 403 (b) plans, there are many other retirement vehicles available, including individual retirement accounts. But IRAs come with complicated rules. There are misconceptions about how they work, and many important things investors should know before diving in. Essentially, an IRA account is simply a place to store and label some of your investments, with certain rights and responsibilities attached, which means you don't need multiple accounts to get the job done.
The folks at Bankrate.com say IRAs may offer more flexibility than 401 (k) plans, but it's worth your time to carefully weigh the advantages and disadvantages. Know that rolling over other retirement plans into an IRA may help, but could also cost you in terms of tax savings. There are rules about when and how you can move money around within tax-deferred accounts to avoid penalties. And while employer-based plans often take care of where your money is invested, IRAs can require more hands-on decisions. Experts also say it's important to fill out the beneficiary form, to make sure your assets are distributed according to your wishes and avoiding probate.
To help your readers/listeners/viewers find out more about how IRAs work, interview financial planners and bankers in your community. They can explain the basics of how to open and maintain accounts, point out the tax implications and give examples of how the accounts can be used to provide income in retirement.
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Kurtis Ming of KOVR-TV entered the 2016 NEFE/RTDNA awards contest with his station's ongoing series of personal finance and consumer protection stories.