In honor of Talk Like a Pirate Day, we’ve turned over today’s blog to a special guest blogger who has escaped the depths of Davy Jones’ Locker! He’s no stranger to rough seas, and he’s got sharp instincts when it comes to stashing gold for the years ahead.
What Be an I-RRRR-A, Ye Ask?
An I-RRRR-A (aye, landfolk say “IRA”) be a mighty chest fer stashin’ treasure ‘til yer golden years. Instead of buryin’ yer gold in the sand where another blackguard might dig it up, ye can tuck it away and open the chest when the time be right.
There be two kinds most sailors choose from:
- Traditional I-RRRR-A: Ye get a break on yer taxes now, but the king’ll want his share when ye pull the treasure out later.
- Roth I-RRRR-A: No break today, but when ye finally raid the chest in retirement, the loot be all yers.
Chartin’ the Course: I-RRRR-As vs. the 401(k) Fleet
Don’t be mixin’ up yer chests. An I-RRRR-A be yer own personal treasure hold—you chart the waters, ye choose where yer coin be stashed.
A 401(k), on the other hand, be sailin’ with the company fleet. The captain (yer swashbuckling employer) may toss in extra doubloons to sweeten the pot, but ye’ll be sailin’ with fewer choices for how the loot’s invested.
Plenty o’ clever sailors use both: a fleet 401(k) for the captain’s match, and an I-RRRR-A to chart their own course.
Rules o’ the Voyage
Even a pirate must heed the laws o’ the sea:
- There be limits to how much treasure ye can stash in yer chest each year.
- Take yer loot too early, and the taxman may slap ye with a penalty sharper than a walk off the plank.
- With certain chests, once ye be a weathered, ancient mariner, ye must start haulin’ out doubloons whether ye like it or not.
A Pirate’s Final Word on Treasure
Whether ye stash it in a Traditional or Roth I-RRRR-A, or sail with the 401(k) fleet, what matters most is settin’ aside treasure while the winds be in yer favor.
It’s not the treasure ye plunder today that makes ye wealthy, but the treasure ye save for when ye pull into port!
Disclaimer: This blog post is in celebration of Talk Like a Pirate Day and should not be taken as actual financial advice. You should definitely not take financial advice from pirates. They are notorious scallywags. Please consult with one of our land-based financial advisors for treasure and retirement planning advice.
Contributions to a traditional IRA may be tax-deductible depending on the taxpayer’s income, tax-filing status, and other factors. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty. Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. 401(k) plans are long-term retirement savings vehicles. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty.