Retirement
Plan Your Future
Retirement planning looks different for everyone, which is why setting clear long-term financial goals is so important. A trusted financial advisor can help simplify the process of organizing priorities and choosing the right path. At Michael Leslie Investments, we work with you to build a retirement plan tailored to your needs, with an investment strategy that evolves as you get closer to retirement.
What is an Individual Retirement Account?
An Individual Retirement Account (IRA) is a personal savings vehicle designed to help you set aside money for retirement while enjoying valuable tax advantages. IRAs offer a broad selection of investment options and can be a key part of building long-term wealth.
While many people contribute to employer-sponsored plans like 401(k)s or 403(b)s, IRAs are often used alongside these accounts to maximize retirement savings, diversify investments, and add greater control and flexibility to an overall retirement strategy.
Types of IRAs
The most common types of Individual Retirement Accounts are Traditional IRAs, Roth IRAs, and Rollover IRAs—each offering distinct benefits depending on your financial goals and tax situation. There are also specialized variations like Inherited IRAs and Custodial IRAs, which serve specific needs.
Understanding the differences between these account types is key to choosing the right IRA for your retirement strategy, as each one comes with its own rules around contributions, withdrawals, and tax treatment.
Common Types of IRAs
Traditional IRAs
Contributions may be tax-deductible depending on income and participation in an employer plan.
Earnings grow tax-deferred until you withdraw them in retirement.
Withdrawals in retirement are taxed as ordinary income.
Required Minimum Distributions (RMDs) begin at age 73.
Early withdrawals before age 59½ may incur a 10% penalty (with some exceptions).
Roth IRAs
Contributions are made with after-tax dollars and are not tax-deductible.
Qualified withdrawals (after age 59½ and at least five years) are completely tax-free.
No RMDs during the account holder’s lifetime.
Ideal for those expecting to be in a higher tax bracket in retirement.
Income limits apply for eligibility to contribute directly.
Rollover IRAs
Used to transfer funds from a 401(k), 403(b), or other employer-sponsored plan without triggering taxes.
Maintains the tax-deferred status of retirement savings during a job change or retirement.
Can be converted to a Roth IRA, though taxes will be owed on the converted amount.
Offers a wide range of investment options beyond most employer plans.
No contribution limits, but only rollovers—not new contributions—can be added.
Specialized IRAs
Inherited IRA (Beneficiary IRA)
Created when someone inherits an IRA or employer-sponsored retirement plan.
Rules for withdrawals depend on the relationship to the original account holder and when they passed away.
Most non-spouse beneficiaries must withdraw all funds within 10 years (per SECURE Act rules).
RMDs may still apply, depending on the situation.
No new contributions can be made to the account.
Custodial IRA (for Minors)
Opened by a parent or guardian on behalf of a minor with earned income.
Can be a Traditional or Roth IRA structure.
Helps young people start retirement savings early and take advantage of compounding.
Once the child reaches the age of majority (typically 18 or 21), they gain full control.
Annual contribution limits are the same as standard IRAs.
Start Planning Your Future
The earlier you begin planning for retirement, the more time your money has to grow. Thanks to the power of compound interest, consistent contributions to a retirement account, however modest, can accumulate significantly over the years. Time in the market often matters more than timing the market.
Building a habit of regular contributions helps create financial stability and reduces stress as retirement approaches. Whether it’s through an IRA, a 401(k), or a combination of both, consistent investing aligned with your goals can set the foundation for a more comfortable and secure retirement. It’s not about making huge moves—it’s about making the right moves consistently over time.
Talk to Michael Leslie Investments about planning for your future.
Frequently Asked Questions
What is an IRA?
An Individual Retirement Account (IRA) is a tax-advantaged savings account designed to help individuals save for retirement. You can contribute annually, and depending on the type of IRA, receive tax benefits now or later.
What are the different types of IRAs?
Traditional IRA: Contributions may be tax-deductible; earnings grow tax-deferred until withdrawal.
Roth IRA: Contributions are made with after-tax dollars; qualified withdrawals are tax-free.
Rollover IRA: Used to move funds from a 401(k) or other retirement plan without paying taxes.
Inherited IRA: Created when you inherit an IRA or retirement plan from someone else.
Custodial IRA: Opened by a parent or guardian for a minor, usually a Roth or Traditional structure.
How much can I contribute to an IRA?
For 2025, you can contribute up to $7,000 if you’re under 50, or $8,000 if you’re 50 or older (includes a $1,000 catch-up contribution). Contribution limits can change yearly.
Who is eligible to contribute to a Roth IRA?
Eligibility is based on income. For 2025, single filers earning under $161,000 and married couples filing jointly earning under $240,000 may be eligible, with phase-out ranges applying.
When can I withdraw money from an IRA?
Traditional IRA: Penalty-free withdrawals begin at age 59½. Required minimum distributions (RMDs) begin at age 73.
Roth IRA: Contributions can be withdrawn anytime. Earnings can be withdrawn tax- and penalty-free after age 59½ if the account has been open for 5+ years.
Can I have both a 401(k) and an IRA?
Yes. Many investors use IRAs alongside employer-sponsored plans to increase savings and add more investment options.
Are IRA contributions tax-deductible?
Traditional IRA: Contributions may be deductible depending on your income and whether you or your spouse are covered by a workplace plan.
Roth IRA: Contributions are not deductible, but qualified withdrawals are tax-free.
What happens if I withdraw early?
Withdrawals before age 59½ may be subject to a 10% penalty plus income tax, with some exceptions (e.g., first-time home purchase, qualified education expenses, etc.).
Can I open an IRA for my child?
Yes, through a Custodial IRA, if your child has earned income. Roth IRAs are common choices for children due to their low current tax rates and long growth windows.
How do I start an IRA?
You can open an IRA through a bank, brokerage, or financial advisor. Michael Leslie Investments LLC can help you evaluate the right type of IRA and guide you through setup and investment strategy.
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