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Individual Retirement Accounts

Saving through an Individual Retirement Account can have many benefits. In particular, earnings on your contributions (money you put into your IRA) are always tax-deferred, and in some cases tax-free. Having earnings which are tax-deferred means you have more money to re-invest, which may lead to much greater capital appreciation over a long period of time. This phenomenon is known as tax-deferred compounding.

Let’s look at a simple, real world example. If you were to contribute $5,000 at the beginning of each year to an IRA, and assume an 8% rate of return for 30 years, your IRA would be worth $566,416 at the end of year thirty. If you made the same investment in a non-tax sheltered environment, assuming a 31% tax rate, it would be worth $363,440 instead of $566,416. That is a difference of $202,976.

The longer you save, the more time your money has to grow. The important thing is to start saving early. Today there are more choices than ever, including deciding whether you want to defer tax on your IRA contributions by deducting them from your current income, or pay tax on your contributions now and withdraw your earnings tax-free at a later date. Please use our website and brochure to help make the best choice for your personal investment needs. Also, remember that there is always an IRA specialist waiting to help you at Saturna Capital.

IRA Investments Have Flexibility

IRAs are not limited to investment banks, CD's or mutual funds. Few people realize they have the option to self-direct their IRAs into stocks, bonds and even real estate (see Prohibited Transactions). Several IRA investment options are discussed in this section of the website. If you have further questions after reviewing the information in this section, please contact a Saturna Capital representative.

IRA Contributions

Contribution Limits. The government continues to raise the limits on contributions to both Traditional IRAs and Roth IRAs, making it possible to accumulate a larger pool of retirement assets. The contribution limit for 2013 is $5,500. The limit will be increased periodically to offset inflation. The increases apply to all IRAs, including those for spouses who do not have earned income. A married couple with one wage earner and one person staying at home may be able to contribute a total of $11,000 to their two IRAs in 2013 (if they file jointly):

Year Contribution Limit
2012 $5,000
2013 $5,500

Age 50+ IRA Contributions. Workers age 50 and older (as of the end of the year) are able to make additional "catch up" contributions on a phased-in basis. For 2012 & 2013, the catch-up contribution limit is $1,000.

Investing Your Contributions

Your contributions will be deposited in a separate IRA custodial account. The money you contribute to your IRA may be invested in one or a combination of mutual funds for which our wholly-owned subsidiary, Saturna Trust Company, provides custodial service as a trustee.

There are no account charges or custodial fees to open an IRA with Saturna Capital. The annual fee for IRAs invested only in affiliated mutual funds is paid by the Fund as part of its transfer agent fees, and there are no charges to the individual account owners.