IRA Colusa Q&A

Q: What is an IRA Colusa?
A: An IRA Colusa is a retirement account open to anyone under the age of 70 ?. Like a 401K, the money is not taxed until after it is taken out once a person has retired. You can take the money out of an IRA earlier, but like a traditional 401K, you will be penalized and have to pay a considerable fee. An IRA is ideal for those who are self-employed or work for an employer that does not offer a 401K.

Q: How much can I contribute to an IRA?
A: An IRA has a max of $5,500 a person can contribute each year.

Q: I?m older than 50. Can I still get an IRA?
A: Yes. The IRA is set up so someone who opens a retirement account later in life can play catch-up. This means you can open the IRA and contribute more to it than the $5,000 per year. This is $6,500 per year. While this may not catch you up in the same sense as someone who started their retirement account at age 20, it still allows you to put a considerable amount of money away in a relatively short time.

Q: Is an IRA better than my company?s 401K?
A: Usually not. Most of the time a 401K is better because if the employer is not matching what you put into the account, they are giving you half of the money. For example, for every $1 you put in, the employer is putting in .50 which accumulates fast. If the employer is doing any sort of contribution, the 401K is almost always the better bet. Ask a financial advisor for their opinion if you are switching jobs or considering opening an IRA.

Q: Can a non-working spouse have an IRA?
A: Yes. IRAs are open to anyone. The maximum contribution per year is always $5,000 whether the person is employed or not. The IRA works exactly the same for non-working individuals as it does for those who are employed.

Q: Can a minor have an IRA?
A: Yes. The minor is entitled to put in a maximum of $5,000 per year or their entire income ? whichever is less. The IRA must be opened by an adult and held by that person until the minor is of age. The minor can add to the IRA as they wish (as long as it does not exceed the above) and their name is formally tied to the IRA.

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