3 Instances when an IRA Account is Second Best

An IRA account presents an excellent retirement savings solution for most individuals. However, there are some cases where the account will not solve any problems.

#1 You Have Little to No Taxable Income

Even if you have a high income, your taxable income may be very low, depending on how you file. For example, independent contractors and small business owners often have little to no tax liability at year's end. They will not receive a large benefit from contributing to an IRA, and they may be better off depositing funds in a more flexible account.

#2 You Need High Yield Investments

You are not permitted to earn yields and dividends off the investments in your IRA portfolio while it is active. As a result, there is no ongoing income off the account. If you have very little money at all to save, it may be preferable to place the funds in a taxable account where you can at least earn an income from your investments.

#3 You are Approaching 70

Once you reach 70-1/2, you will be required to start pulling money out of your IRA. As you approach this age, it may be wiser to invest in accounts you independently manage rather than into an account with terms that will soon be dictated for you.

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