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Maximize Your Wealth with the Right Investment Accounts

Investing is a crucial part of building wealth and securing your financial future. Whether you’re saving for retirement, education, or medical expenses, choosing the right investment accounts can help you grow your savings faster and more efficiently. At O1ne Mortgage, we are committed to helping you navigate the world of investments and achieve your financial goals. Call us today at 213-732-3074 for personalized mortgage services and investment advice.

1. Retirement Accounts

Retirement accounts are designed to help you build a nest egg for your golden years. These accounts offer tax advantages that can significantly boost your savings over time. Here are some popular retirement accounts:

401(k)

A 401(k) is an employer-sponsored retirement account that allows you to make pre-tax contributions directly from your paycheck. Your money grows tax-free, and your employer may also contribute on your behalf. In 2024, you can contribute up to $23,000 ($30,500 if you’re 50 or older). Contributions are tax-deductible, reducing your taxable income today, but you’ll be taxed on distributions in retirement. Be aware of the 10% early withdrawal penalty for accessing funds before age 59½ and the required minimum distributions (RMDs) starting at age 73.

Traditional IRA

A traditional IRA offers similar benefits to a 401(k), including tax-deductible contributions and tax-free growth. However, it has lower contribution limits. In 2024, you can contribute up to $7,000 across all your IRAs (or $8,000 if you’re 50 or older). Withdrawals are taxed as regular income, and early withdrawals before age 59½ incur a 10% penalty. RMDs also begin at age 73.

Roth IRA

A Roth IRA is funded with after-tax dollars, meaning your contributions grow tax-free, and you won’t be taxed on qualified distributions in retirement. You can withdraw your contributions at any time without penalties, and RMDs do not apply. However, there are income limits for contributing to a Roth IRA. In 2024, you cannot contribute if you earn more than $161,000 as a single filer or $240,000 as a married couple filing jointly.

2. Brokerage Accounts

Brokerage accounts offer flexibility and a wide range of investment options, including stocks, bonds, ETFs, and mutual funds. While they don’t provide the tax advantages of retirement accounts, they have no contribution limits or income caps. You can withdraw your money at any time without penalties, but you’ll be taxed on investment gains in the year they’re realized. Brokerage accounts are available through individual stockbrokers, online investment brokerages, or robo-advisors.

3. Education Accounts

Education accounts are designed to help you save for education expenses, offering tax benefits to make saving easier. Here are two popular options:

529 Savings Plan

A 529 savings plan allows you to set aside money for college, graduate school, and K-12 tuition. Your contributions grow tax-free, and you won’t pay federal income taxes on qualified withdrawals. Some states also offer tax deductions or credits for 529 contributions. Qualified expenses include tuition, fees, room and board, and learning materials. You retain control of the account, even after the beneficiary turns 18, and can change the beneficiary if needed.

Coverdell Education Savings Account (ESA)

A Coverdell ESA offers more diverse investment options than a 529 plan, including stocks, bonds, ETFs, mutual funds, and real estate. Contributions grow tax-free, and qualified withdrawals are tax-free. However, contributions are limited to $2,000 per year, and there are income limits for contributors. The beneficiary must use the funds by age 30, or the account must be transferred to another eligible beneficiary.

4. Health Savings Accounts (HSAs)

An HSA allows you to save for qualified medical expenses with significant tax advantages. Contributions are tax-deductible, your money grows tax-free, and qualified withdrawals are tax-free. To contribute to an HSA, you must be enrolled in a high-deductible health plan. In 2024, you can contribute up to $4,150 for individual coverage or $8,300 for family coverage, with an additional $1,000 catch-up contribution for those 55 and older. After age 65, you can use HSA funds for any purpose, but non-qualified withdrawals will be taxed.

The Bottom Line

Investing in the right accounts can help you grow your wealth and achieve your financial goals. Whether you’re saving for retirement, education, or medical expenses, there are investment accounts tailored to your needs. At O1ne Mortgage, we are here to guide you through the investment process and provide personalized mortgage services. Call us today at 213-732-3074 to learn more about how we can help you secure your financial future.

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