While it is likely that you have heard about IRAs and how they can help you save for retirement, you may not know what exactly an IRA is or how it works. Here's a breakdown of everything you need to know about IRAs so that you can decide if one is right for you.

What Is an IRA?

An IRA, or Individual Retirement Account, is a savings account that comes with special tax benefits that allow your money to grow much faster than it would in a traditional savings account. The money you contribute to your IRA can be invested in a wide variety of assets, including stocks, bonds, and mutual funds.

There are two main types of IRAs: traditional IRAs and Roth IRAs. The key difference between the two is when you pay income taxes on the money. Traditional IRAs offer tax-deferred growth, which means that you won't have to pay income taxes on that money until you take the money out once you are retired. Roth IRAs, on the other hand, offer tax-free growth, which means that you pay the taxes now and can use the money tax-free later. There are benefits to each option. Talk to your tax adviser or financial planner to determine which option is best for your individual situation and long-term goals.

What About Fees?

Like any bank account, there are fees associated with both traditional and Roth IRAs, including set-up, maintenance, transaction, and management fees. There are, however, some companies that offer 'No Fees for Life' IRAs. This type of IRA is typically self-directed, meaning you are in charge of the account's direction and investment decisions without the assistance of an adviser. However, because No Fees for Life IRAs are often invested in gold and silver, detailed analysis and complicated decisions are not required. Like bank fees, IRA fees can eat into your earnings if you are not careful, which is why a No Fees for Life IRA is so attractive to investors willing to do a little work themselves.

How Much Can You Put in an IRA Each Year?

The Internal Revenue Service adjusts the amount you can put in an IRA each year. Currently, individuals can contribute $6,500 annually, $7,500 if they are over the age of 50. The amount can be in a traditional IRA, a Roth IRA, or a combination of both. It is important to note that the amount you can contribute to a Roth decreases as your income rises, eventually falling off completely.

If you're looking for a way to save for retirement that offers some great tax benefits, choose the type of IRA that is right for you and look into No Fees for Life IRA options to save money on fees, too.

Contact a professional to learn more about No Fees for Life IRAs