You may not even know what an IRA (individual retirement account) is. That’s okay. We are here to help the confusing become understandable!

USC Credit Union
Tom Tan
CFS* Financial Advisor
213-821-7269
TTan@cusonet.com
CA License No. OD83590

An individual retirement arrangement (IRA) is a personal retirement savings plan that offers specific tax benefits. In fact, IRAs are one of the most powerful retirement savings tools available to you. Even if you're contributing to a 401(k) or other plan at work, you should also consider investing in an IRA.

What types of IRAs are available?

There are two major types of IRAs: traditional IRAs and Roth IRAs. Both allow you to make annual
contributions of up to $5,500 in 2016 (unchanged from 2015). Generally, you must have at least as
much taxable compensation as the amount of your IRA contribution. But if you are married filing jointly, your spouse can also contribute to an IRA, even if he or she does not have taxable compensation. The law also allows taxpayers age 50 and older to make additional "catch-up" contributions. These folks can put up to $6,500 in their IRAs in 2016 (unchanged from 2015).

Both traditional and Roth IRAs feature tax-sheltered growth of earnings. And both give you a wide range of investment choices. However, there are important differences between these two types of IRAs. You must understand these differences before you can choose the type of IRA that's best for you.