An IRA benefits account is better than having a regular brokerage account in terms of preparing for retirement.
Withdrawing from your IRA benefits may be possible without penalty if you lose your job at 55. (Photo: Kiplinger)
The Use Of IRA Benefits
Saving and investing for retirement in a 401(k) or IRA benefits are better compared to a regular brokerage account. Contributions to a traditional 401(k) or IRA benefits are made pre-tax, allowing you to shield some of your income from taxes.
Gains in these retirement accounts, such as IRA benefits, are tax-deferred until you withdraw funds, unlike a regular brokerage account where capital gains taxes are owed. However, accessing money from IRA benefits before the age of 59 1/2 generally incurs a 10% early withdrawal penalty, except for certain exceptions like buying a first-time home.
If you retire or lose your job at age 55 or later, you may be able to withdraw from your IRA benefits without penalty, but only from the specific plan of the employer you separated from. Rolling over the balance into an IRA benefits account or withdrawing before 55 will result in penalties.
According to a published article by The Motley Fool, retirement plans, such as contributing to IRA benefits can provide flexibility if you need access to your funds before reaching the standard retirement age where you can use the IRA benefits later on.
The Advice Of Financial Advisers
In a published article by Yahoo Finance, financial advisors generally advise against withdrawing money from retirement accounts before reaching retirement age. However, if it becomes necessary to meet essential expenses, it may be the right decision.
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