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Let's talk IRAs
I've been a lurker on this board recently and really like the tips that are given. I am 31 and began working in my career about 2.5 years ago (I was in school for a very long time). I'm working as an independant contractor and have an S-corp business, so I don't have a 401K or any other retirement accounts at this point.
I would desparately like to start saving for my retirement and have been researching IRAs. I'm doing a lot of research so everything is a bit confusing to me still. What would be the best method of saving for retirement and if I were to get an IRA, which would be the best for a self-employed contractor? Another thing that I'm not understanding is if I would need to contribute say $5,000 at one point or can it be payments over the year? TIA
Re: Let's talk IRAs
I would suggest looking at places like Vanguard, Fidelity, or T Rowe Price. They all offer low cost mutual funds. Each one has different account minimums, so you'll have to look into that.
I have a Roth IRA with T Rowe Price because at the time I couldn't afford to put $3000 at once into Vanguard and T Rowe Price let me contribute as little as $50 monthly.
You can contribute monthly through automatic deductions or annually or some other schedule. It's pretty much up to you. You have until April 15th to make contributions for the 2012 tax year.
Hopefully, this helps!
A Roth IRA would be a good choice. You do not have to contribute all $5,000 at once at most places. Also remember that you can make contributions for 2012 until April 15th, 2013. So if you think you'll have more than $5,000 this year, you can put some towards 2012 before you start contributing for 2013.
as someone who is self employed, you do have other options that can affect your tax situation. You might want to talk to a professional.
Like PP, I would go with a Roth IRA. The funds you contribute are already taxed on, so if you need to pull money out, you don't pay taxes (vs. a 401k or traditional IRA where it's pre-taxed money and you'd pay taxes if you had to pull it out). There are many options as far as contributing goes and you don't have to put in $5000 all at once. If you're able, you definitely want to make a contribution for 2012. GL!
I second Vanguard. They have a fantastic website. Many/most of their IRAs have low fees or no fees at all.
You can set up automatic contributions from your bank's checking account into this IRA so it happens without you having to think about it, which is exactly what an employer's retirement plan would do (deduct a contribution automatically from your direct deposit).
I believe it is per person.
TTC since June 2012