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Q&A Regarding IRAs

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Q&A Regarding IRAs

Posted On: October 14, 2021 by Exchange Bank of Northeast Missouri in: Financial Education, Retirement

IRAs can be confusing and even seem unnecessary to talk about for some, especially if retirement still seems lightyears away. Allow us to answer some of the most common questions people have about IRAs: Q: Am I allowed to contribute to an IRA if I have a retirement plan through work?  A: Yes, as long as you meet the IRA’s eligibility requirements ‐ even if you participate in a 401(k) plan at work.  Q: What is the contribution limit? A: The contribution limit is annual, so the amount you are allowed to contribute can change from year to year. For 2019, 2020 and 2021 it is $6,000 (or $7,000 if you’re age 50 or older). Your contribution limit might also change based on your income and filing status. Q: What is the difference between a Roth IRA and a Traditional IRA? A: The main difference is that with a Roth IRA you contribute after‐tax dollars, so your money grows tax‐ free. A Traditional IRA, on the other hand, includes contributing pre‐tax