Mark Berg was recently quoted in an April 21st article in the Chicago Tribune newspaper. The article identifies sound financial reasons for contributing to an IRA. The article discusses how 1) IRA’s provide an opportunity to further grow your retirement nest egg and diversify retirement assets, 2) you can generally participate as long as you have earned income but depending on which type of IRA you open, certain income limits may apply, and 3) other people have the opportunity to contribute for you. Below is an excerpt from the article where Mark addresses the third point…
“Should you contribute to an IRA?” said Mark Berg, a financial adviser in Wheaton, Ill. “Yes, but only if you aren’t going into debt in order to do so.”
But parents, grandparents and anyone else can make a contribution on your behalf (again within the limits mentioned previously).
“I funded both of my sons’ Roth accounts, and they benefited greatly from that until they could fund it themselves,” said Bonnie Sewell, a financial planner in Leesburg, Va.
Look for low minimums. Even without help from family, you may be able to start funding an IRA with little money. In many cases, the minimum initial investment for a mutual fund is lowered if you save through an IRA.
At T. Rowe Price, for example, the minimum you need to get started in a mutual fund drops to $1,000 when you buy through an IRA. Subsequent investments can be as low as $100.
Get started with this year’s tax refund. Having trouble coming up with enough seed money to start an IRA? Consider using part or all of a potential tax refund this year. The average refund is about $2,800, according to the Internal Revenue Service.
“That might be a great way to get started,” Berg said.