“March”ing Toward Tax Day
by Karen on March 3rd, 2009
Where did February go? February may be the shortest month but it seemed to really fly by this year. The news stories of the economy and the new administration seemed to whisk it away. So now we find ourselves in March and only a few weeks away from the official start of spring…and tax season. “Tax day” is now only a month and a half away. While the thought of preparing a tax return may not be the most tantalizing topic it is a reminder that there is still time to look into IRA contributions for 2008. And these days an IRA through a bank might be a good fit.
An IRA allows you to prepare for retirement by investing for the long term in a tax advantaged way. Investment gains are not taxed until disbursements are made. And in some cases the contribution may be deductible as well. (The main types of IRAs are Traditional and Roth – there are differences between the products with Roth IRAs offering a bit more flexibility but there are tighter restrictions on who can qualify). In general IRAs provide an additional way for anyone to save for retirement. They can be particularly effective for employees of small businesses who may not have retirement plans available at work.
The IRA structure can be used to invest in a range of assets. As a bank we offer cash investment products – meaning that an IRA at a bank can be invested in CDs. You can choose a CD with a fixed rate of return and guarantee your results. Or you can choose a floating rate that responds to change in the interest rate environment. Both approaches can be done inside of an IRA. And all of these cash investments at a bank like ShoreBank are FDIC insured up to $250,000, a limit which is not impacted by your funds in other accounts.
As you prepare for taxes spring forward to some long term planning and see if an IRA invested in a CD is a good fit. IRA contributions for 2008 can be made up until April 15th.
If you are looking for the official descriptions of IRAs, here is a link to the IRS introduction http://www.irs.gov/publications/p590/ar01.html#d0e412
If this year has been particularly difficult, the IRS has information on helping financially distressed taxpayers http://www.irs.gov/newsroom/article/0,,id=202244,00.html
Tags: community development, green banking, IRA, ShoreBank, triple bottom line
