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Are all IRAs the same?

April 01, 2017

Around this time of year, the buzz increases about last minute Individual Retirement Account (IRA) contributions.  Before the personal tax filing deadline, contributions may be made towards the prior calendar year.  The question is: WHAT is an IRA?
One good analogy uses a basket of eggs.  The IRA is the basket, and the accounts you choose are the eggs in that basket.  You can have more than one basket, each holding different types of eggs. Depending on your goals, you may choose to open an IRA with a bank or brokerage firm, or both.   
Banks offer savings accounts, money markets, and Certificates of Deposit (CDs) that may be designated as an IRA. These are all FDIC insured and offer a low risk option for your retirement savings.  Minimum opening deposits and account fees are generally quite small, making them good places to begin saving.
Investment companies offer non-FDIC insured investment vehicles like stocks, bonds, and mutual funds to hold inside your IRA basket.  Because of the ups and downs inherent in the stock market, you will see a disclosure like this:
Securities and Insurance products provided by Cetera Investment Services LLC, member FINRA/SIPC. Advisory services offered through Cetera Investment Advisers LLC. Neither Cetera Investment Services nor Cetera Investment Advisers is affiliated with First Security Bank where investments are offered. Investment Services are: Not FDIC insured. Not a guarantee by a financial institution. Subject to risk and may lose value. Not a deposit. Not insured by any federal government agency.
And this:
Consult your legal or tax counsel for advice and information concerning your particular circumstances. Neither Cetera, nor any of its representatives may give legal or tax advice.
Everyone’s retirement goals are unique.  Knowing your risk tolerance and researching the various options is important—but the real key to success is GETTING STARTED.  While bank employees can’t give investment advice, our Account Specialists can help with the savings or CD eggs in your basket.  If you would like to learn more from a Financial Advisor, Tyson Hunter is available to help.

Posted in: accounts, IRAs, retirement