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

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 →


Beneficiary IRA Rules

After an account holder passes away and all rights are transferred to the account’s beneficiary, most of the rules of the IRA still apply to the new owner. Of course there would be additional factors to consider after you inherit a certain IRA account. Let’s say you are going to inherit a Roth IRA account then you should first take a look into its pre-existing rules.

Roth IRA Rules

Those who receive compensations taxed by the government are eligible to open a Roth IRA. Taxed compensations include salaries, wages, bonuses, tips, professional fees and all other forms of pay for giving services to individuals. Learn more the of Roth IRA rules now. Continue reading →


Early Withdrawal from IRA

Life happens, emergencies arise when we least expect it crippling our budget’s stability. These times we consider getting loans from various sources. We are even forced to take out money from our retirement plans such as IRA’s before it matures, although this is normally not permitted and certain fees and penalties are to be imposed with doing so. Early withdrawal penalties though have exemptions and we will discuss them later in this article.

There are so many types and forms of Individual Retirement Accounts. Traditional IRA, Roth IRA, SEP IRA, Self-Directed IRA, and Simple IRA are the most popular. So to narrow down the broadness of our main topic that is IRA early withdrawals, let’s be specific to one type of IRA and that would be Roth IRA.

Roth IRA account is the most popular choice of many because of its tax-free growth and tax-free withdrawals. Let us learn about Roth IRA basics and later discuss how withdrawals from this type of account work. Roth IRA rules include eligibility rules, contribution rules and withdrawal rules.

Eligibility

Every individual who is working for a living is entitled to open a Roth account regardless of age. As long as you’re receiving taxed compensations such as wages, bonuses, salaries, professional fees, and all other income because of giving service to others then you can contribute to this type of IRA account. Continue reading →


SEP IRA Rules

Simplified Employee Pension (SEP) IRA is the way to go if you are a small employer (typically less than 10 employees and many times just on employee) looking for a retirement plan that is easy to install and administer. Most financial institutions will have the plan documents on file and it’s as easy as opening any investment or bank account. For those of you that do not know how easy it is, you just have to fill out a couple forms and you’re good to go. These are retirement plans that are ideal for small business owners and self employed individuals.

Rules for SEP IRAs

Since the funding vessel of SEP IRA is Traditional IRA, distribution rules of Traditional IRA applies with SEP. Distributions after reaching the age of 59 ½ will be without 10% early withdrawal penalty because it is a qualified distribution already.

Contributions of eligible employees will have a limit of $49,000. It will be made exclusively by their employers and generally it is tax deductible.

Any employer can open a SEP IRA account. That includes sole proprietors, partnerships, corporation and even non-profit organizations. Continue reading →


Inherited IRA Rules

There are several types of IRA but let us look into the type most Americans opt to have – the Roth IRA. Several rules govern this type of account and most are from the IRA basics like contribution rules, and distribution rules.

IRA Contribution Rules

Roth IRA contribution limits 2011 are very simple. Every working individual who receives salaries, wages, bonuses, professional fees and even tips can contribute to a Roth IRA account as long as they don’t exceed the income limits set for IRA filers. Contributions can amount up to a maximum of $5,000 and for account holders that are above 50 years of age will enjoy a catch up limit of $1,000 for a total of $6,000. For full contribution to Roth one should not have an income more than the limits specifically set for each individual. Roth IRA income limits are as follows:

  • For single filers, head of households and married couples filing separately and not living together will have a modified adjusted gross income (MAGI) limit of $107,000-$122,000.
  • A MAGI limit of $169,000-$179,000 will be for joint filers.
  • Married couples filing separately and living together should not exceed and MAGI of $10,000 as their limit. Continue reading →

Roth IRA Income Limits

Saving money for retirement is a great idea. When it comes to retirement plans, one of the options you have is to start an IRA or Individual Retirement Account. If you have decided to start an IRA, you first have to understand some IRA basics. You have to understand that IRA isn’t the investment itself but rather a retirement account that holds your investments. There are basically three types of IRA namely the traditional IRA, Roth IRA and SIMPLE IRA. You have to decide which type of IRA is most suitable for you. If you have decided to start Roth IRA, then you have to know about the Roth IRA rules.

How do you start Roth IRA? Starting Roth IRA isn’t that difficult. If you are eligible for Roth IRA, you just have to find the right IRA provider for you. To be eligible for Roth IRA, all you need is a taxable compensation which includes salaries, bonuses, wages, tips, fees and other forms of income you may have received by providing services. There is no age restriction so anyone can make contributions to Roth IRA regardless of age. When it comes to contributions, there are also IRA contribution rules that govern Roth IRA. Continue reading →


IRA Contribution Limits 2011

It is always best to prepare for the future. If you want to live a comfortable life when you reach the age of retirement, then you need to have a retirement plan. One of the options you have to save for retirement is by starting an IRA account. IRA or Individual Retirement Account isn’t the investment itself. The IRA is a retirement account holding the investments.

IRA basically has two types. You have traditional IRA and Roth IRA. You need to understand more about these IRA’s for you to decide which is most suitable for you. After you have determined which type of IRA is right for you, you then have to know about the rules that govern IRA’s. When it comes to Traditional and Roth IRA rules, it may refer to eligibility rules, contribution rules and withdrawal rules.

IRA Contributions Limits for 2011

Before we will discuss about IRA contribution limits 2011, let us first find out who are allowed to make contributions to IRA. With traditional IRA, you have to be under 70 ½ years of age at the end of the calendar year and you also need to have some form of compensation to be able to make contributions. Compensation can be in the form of salaries, wages, bonuses and commissions. Roth IRA on the other hand doesn’t have age restrictions. Anyone can make contributions to Roth IRA as long as you have taxable compensation. Continue reading →


New IRS Rules for IRAs

Recently, the Internal Revenue Service (IRS) revised its regulations regarding IRAs.

Benefits of the New IRA Regulations

The new IRS rules allow for increased flexibility in your individual retirement account (IRA). Some of the new provisions:

  • Allow beneficiary rollovers from employer-sponsored retirement plans
  • Eliminate the $100,000 income restriction required for a Roth Conversion
  • Allow for a one-time Qualified Health Savings Account (HSA) funding distribution from your retirement account
  • Permit withdrawals without penalty to cover damage due to Hurricanes Katrina, Rita or Wilma

What do I need to do?

If you have no issues/problems with these new IRA regulations, then no action is required on your part and you do not need to do anything. The changes will automatically go into effect on your IRA account.

If you do have any concerns with the new IRS IRA rules, then you will need to contact your IRA company and speak with a Client Services representative about the additional choices that are available to you.


Understanding the IRA Rules

A lot has been written about IRA rules already, however, this article attempts to simplify the complexity of the program.

IRA stands for Individual Retirement Account, a personal savings account used to help ensure sufficient finances for every contributing person when he retires. When I say “contributing person”, it means he or she who is setting aside funds out from his taxable earnings during the year whether it be from his/her wage, salary, a bonus, or accumulated service tips.

Kinds of IRA

There are presently three kinds of IRAs:

  1. Traditional
  2. Roth IRA
  3. The Simple IRA

Although all pertain to retirement savings account, there are however, slight differences in terms of rules of Eligibility, Contribution, and Withdrawal. 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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