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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?

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.

IRA Basics

What is life security? Are you in your middle ages now, at the peak of your carrier, earning money and want to invest it for future dispense? Are you confident that you have enough savings when you reach your premium age? What’s your life expectancy and do you relish enjoying your savings before you reach that stage? Everyone is entitled to life security, hence, the government made sure that each and everyone will enjoy this benefit once they reach their optimum age by provisioning bills for retirement plans.

IRA Rule: 10% Tax Exemptions

Did you know that with the IRA withdrawal rules that if you take out your money early you can be hit hard with penalty fees?

However, you may not have to pay the 10% additional tax on withdrawing your funds unless you meet a 5 year rule that applies, or it the following IRA exemptions:

• You have reached age 59 1/2.
• You are disabled.
• You are the beneficiary of a deceased IRA owner.

2012 IRA Contribution Limits

Since based on the IRA rules, the contribution limits for the Individual Retirement Accounts are being updated every year based on the cost-of-living changes, it is essential you to be aware of and stay updated with the current IRA contribution rules and limits so that you can get the most out of your IRA.

This year 2012, there are revised contribution limits for Traditional IRA, Roth IRA, SIMPLE IRA, and SEP IRA.

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