In the US and UK, savings accounts serve the fundamental purpose of holding and growing funds, but they have some notable differences. In the UK, savers can put up to £20,000 a year into an ISA, which lets their money grow tax free. ISAs are flexible, letting people choose how much to save or invest and for how long. There are four types of ISAs depending on what someone’s goals are. In the US, there are similar accounts like Roth IRAs, Traditional IRAs, and 401(k)s. A 401(k) is offered through your job, and the money goes in before taxes are taken out. The difference between a Roth and Traditional IRA is when you pay taxes. Roth IRAs are taxed when you deposit money, while Traditional IRAs and 401(k)s are taxed when you withdraw. Each account has contribution limits of $22,500 per year for a 401(k), and $6,500 for both Roth and Traditional IRAs.
Very interesting summary of how the different tax wrappers work in UK vs US, the ISA systems has some advantages, and now the cash ISA is under review perhaps this will increase the focus on stocks and shares ISAs. Either way I’m pleased to see that ISAs are now available in Stratiphy.