New IRA Rules

Opening Your IRA

Opening Your IRAIRAs (individual retirement accounts) are invaluable with saving for retirement. Learn how you can easily open your IRA with little funding to maximize your retirement savings.

Open Your IRA

Learn the IRA Rules

IRA RulesDid you know the rules of IRAs are constantly changing each year? And unless you stay on top of them, you could potentially be losing thousands of dollars unnecessarily!

Current IRA Rules

 


Latest IRA Rules

Best Roth IRA Providers

Many employed individuals opt to invest in an Individual Retirement Account or IRA for their retirement. This type of investment vehicle is a really good way to save and secure one’s wealth for the future, so as this will serve as an income replacement when the person is no longer capable for employment. There are several types of IRA plans, and each has different IRA rules and regulations that must be followed. It is important that as investors, we should know what these rules are and we must be familiar with the IRA basics before we invest into any type of IRA plan.

For those employees who had 401k accounts instead of an IRA because this is the type of retirement investment account that their employer opened for them, they may opt to rollover their 401k accounts to IRAs if they are planning to leave their job where they had this account. Of course, this must also be in accordance to IRA rollover rules. Following such rules is very essential in order to avoid paying unwanted and unnecessary taxes and penalties. Finding the best IRA company where this account will be rolled over into is a very wise thing to do. This will provide the investor more possibilities of gaining bigger profits.

Opening a Roth IRA

Most people opt for a Roth IRA among all other IRA plans, because this is the type of IRA that is really advantageous especially when it comes to paying taxes. Because the contributions to a Roth IRA are taxed right at the moment these are made, all qualified withdrawals and distributions are totally tax-free and free of any charges and fees. Thus, many individuals, even those who are planning to make an IRA rollover, prefer to choose the Roth IRA. In order to be eligible for a Roth IRA, the Internal Revenue Services or IRS has set some maximum Roth IRA income limits depending on the marital status of the investors, and these investors must not exceed such limits to be able to make contributions to Roth. Continue reading →


401k Withdrawal Rules

Like the popular Individual Retirement Account (IRA) has several IRA rules and regulations, the 401k retirement account is governed by certain 401k rules and regulations which investors must follow in order to get the most benefits from this account. For instance, the investor must know the prevailing 401k withdrawal rules in order to know what are the risks of having to pay penalties, and how much the penalties will be, if he makes an early withdrawal.

There are times when the investors may need to take an early 401K withdrawal in times of financial difficulties, and these early withdrawals will be subjected to 10% penalties if the investor is under the age of 59 years and 6 months old.

Making 401k Withdrawals

Some investors under the age of 59 years and 6 months old may still make some withdrawal out of a 401k account in the form of a loan. There are 401k loans rules that must be considered as well, and the maximum term for this loan is just 5 years, which means that the investor must pay back what he borrowed within 5 years or less. Furthermore, if the employee with a 40k account decides to resign from his job and leave his current employer, he may be forced to repay his 401k loan within a very short period.

When the 401k account holder reaches the age of 59 and 1/2 years, he may take money out of his 401k account without having to pay the 10% penalty; but this withdrawal is still taxable. When the investor reaches the age of 70 and 1/2, he will be mandated to make a forced distribution from the 401k account at a required minimum amount every year. This amount of mandatory distribution is also taxed as a regular income. Continue reading →


Stretch IRA Rules

A Stretch IRA is not another special type of Individual Retirement Account. In fact, this is an approach to estate planning, which goal is to maximize the tax-deferred growth potential of the IRA assets by leaving them in the account for as long as the account holder and beneficiaries want and as long as the law permits. The approach being used for the stretch IRA does not allow large or lump-sum distributions to the IRA owner and his beneficiaries. Usually, these distributions of IRA assets are spread out to one or two later generations of beneficiaries.

Thus, a stretch IRA, or also known as “inherited IRA”, is simply a wealth transfer method that provides potential to the IRA holder to “stretch” his IRA over several future generations, so the obvious advantage of this is that taxes may also be spread out. Of course, just as the Individual Retirement Account is governed by several IRA rules and regulations, there are some Stretch IRA rules that must also be considered and followed for this type of approach. Continue reading →


IRA Conversion Rules

There are plenty of financial experts say that an individual who owns a Traditional IRA cannot possibly rollover this to a Roth IRA, as this is not included with the IRA rollover rules; rather this transaction is known as “conversions”.

Conversion vs Rollover

Roth IRA conversions are totally different from a rollover. But the process of conversions is just like a 401k rollover to a Traditional IRA. Many taxpayers and Individual Retirement Account holders are able to convert their Traditional IRAs to Roth IRAs ever since Roth IRAs were created in 1998. There are plenty of IRA rules that must be followed, and getting ourselves familiar with such will truly help a lot. When it comes to IRA conversions, we must know what the IRA conversions rules are before making any decision about converting one IRA plan to another. Conversion of traditional IRA to Roth IRA is as easy and simple as filling out the necessary forms and submitting the same to the Roth IRA provider. Continue reading →


Roth IRA 5 Year Rule

We might already be aware that an Individual Retirement Account or IRA is a type of investment vehicle which allows employed individuals to make contributions into as long as they are earning a taxable income during the year. This investment vehicle is governed by certain IRA rules and regulations that must be followed in order to get the most benefits from such investment. There is a variety of IRA plans that an investor may choose from, and one of the most popular and preferred plan is the Roth IRA, which is believed to be more advantageous.

Why a Roth IRA?

The contributions to a Roth IRA are taxed right at the moment they are made. This means that the investment has the opportunity to grow tax-free. In fact, according to the Roth IRA distribution rules, all eligible withdrawals and distributions from the account are non-taxable. There are certain parameters that need to be met in order to enjoy tax-free distributions. Continue reading →


60 Day Rollover Rule

Many people who want to save for their future opt to open an Individual Retirement Account, or IRA, which allows them to make contributions that will be invested in various types of investments which the IRA owner chooses. Just like any other type of investment accounts, there are several IRA rules and regulations which need to be followed in order to get the most benefit from one’s retirement account. These rules may vary from one type of IRA plan to another.

However, not all employed individuals own an IRA. There are some employers who opt to open another type of retirement investment account for their employees, like a 401k account, for instance; and the employee may choose to rollover his funds from such account to an IRA when he is no longer connected with such employer — that is, if he lost or left his job. Any individual who left or lost his job where he had a 401k account may choose the best option of rolling this over to another retirement savings fund, like the IRA. An IRA rollover is a tax-free distribution from one retirement account and will be contributed to an IRA; and with this, necessary IRA rollover rules must be applied. Continue reading →


IRA Rollover Rules

IRA, or Individual Retirement Account, is a type of retirement savings fund which employed individuals and their spouses are allowed to make contributions into. The Traditional and Roth IRAs are the most popular IRA plans available. The IRS, or Internal Revenue Services, has established different rules and regulations for each of these IRA plans.

Before you start your IRA rollover, it’s important the make sure you are within the current IRA rules and regulations to help you avoid any unnecessary fees and penalties that may occur.

Known the IRA Rules

All individuals who are earning a taxable income during the year are qualified to make contributions. The current Roth IRA rules state that the investors must not exceed this maximum income limit set by the IRS in order to be eligible; and there is no age limit for Roth IRA. With Traditional IRA, however, the investors must be under the age 70.5 years at the end of the calendar year in order to qualify.

IRA contribution rules for “standard” contribution, which is applicable for those investors who are below the age of 50 years by the end of the calendar year, has a maximum limit of $5,000. The “catch-up” contribution limit is for those investors who are 50 years old or older by the end of the calendar year, with a maximum limit of $6,000. These limits are the same for both the Traditional and Roth IRAs. Continue reading →


SIMPLE IRA Rules

An Individual Retirement Account (IRA) is a type of investment vehicle which employed individuals could give contributions into, and this will serve as a retirement savings fund. There are rules and regulations for such investment vehicle, and it is important that the investors must be familiar with such rules. Learning the IRA basics will surely help the investors enjoy the most benefits of his retirement plan.

There are several types of IRA plans, and though the most popular plans are often limited to the Traditional and Roth IRAs, there are other plans that must also be considered such as the SIMPLE (Simplified Incentive Matched Plan for Employees) and SEP (Simplified Employee Pension) IRAs. Just as with Roth and Traditional IRAs, there are various IRA rules and regulations for both SEP and SIMPLE IRAs as well. Some of the SEP IRA rules may be different with those rules for SIMPLE, just as the Roth IRA rules are also different from those of Traditional IRA.

Eligibility

In order to be eligible for a SIMPLE IRA, the investor’s employer must first offer the plan to its employees. The employer must have no more than 100 employees who are earning income of $5,000 or more in the prior year. The employer is not allowed to offer another qualified plan, such as a 401k. Thus, many small businesses opt to get a SIMPLE IRA as a retirement solution. For employees who wish to participate in their employer’s SIMPLE IRA plan, they must have received at least $5,000 in compensation for the past two years, and they must be paid at least $5,000 compensation for the current year. Continue reading →


New Obama IRA Rules

Recently President Obama proposed two changes to the existing IRA rules. Tapping into the IRA basics, these two proposals are made to simplify the complicated aspects of IRA withdrawal rules. The proposed amendments can be found in a 151-page Treasury Department document that explains all the Administration’s fiscal 2012 tax proposals and would certainly be very beneficial for retirees and heirs of IRA’s.

The first proposed change aims to eliminate traps for non-spouse IRA heirs that Forbes has been constantly warning individuals. Generally, a beneficiary inheriting an IRA can stretch out the distributions according to his or her own lifespan. With the right decisions and actions with his or her inherited IRA, one can enjoy years of tax incentives with each withdrawal.

60-day IRA Rollover Rule

There’s a rule with IRA’s that allows you to withdraw money from your account free from tax and fees provided that you will return it within 60 days. This is called the 60-day rollover rule. Unfortunately with inherited IRA’s this is not applicable. Although there are no early withdrawal fees for beneficiaries, once you take out money from your inherited IRA account you shall be and will be charged accordingly. That’s how inherited IRA distribution rules work. Fund movement with IRA’s that are inherited should be a specified trustee-to-trustee transaction. Meaning it should be from one IRA custodian to another. Another thing is that you should change the title of the IRA account if you are not the spouse of the deceased IRA account owner.

For simplification, the administration of President Obama is proposing a change on the 60-day rollover rule. The change would be to allow non-spousal heirs to use the 60-day rollover. With this, of course heirs can borrow money without worrying about tax and fees if they can return what they owe to the account within 60 days from the date of the loan. Continue reading →


Important 2011 IRA Dates

January 1, 2011

First day to contribute funds to your traditional or Roth IRA for tax year 2011.
For individuals UNDER the age of 50, the maximum contribution amount is $5,000.

For individuals that are 50 or OLDER, the maximum contribution amount is $6,000.

April 1, 2011

Usually the last day for an IRA owner to take the previous year’s Required Minimum Distribution that an individual chose to defer.

For Traditional IRA Owners who reached age 70 1/2 during the previous tax year. Continue reading →


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The information provided on this website does not constitute professional financial advice. We do our best to maintain current & accurate information, but some information may have changed since it was published. Please consult your tax or legal advisor(s) for questions & advice concerning your personal financial situation.
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