New 2020 IRA Rules
2020 is set up to be a weird and disappointing year for all of us. Despise all the COVID, health, and political issues occurring worldwide, it’s a great time to make sure all your 2020 retirement contributions and profiles are maximized to their fullest potential.
Summary of IRA rules for 2020
Below is a quick summary of the new IRA rules for 2020:
- The maximum annual contribution limit for 2020 is $6,000 (or $7,000 if you’re age 50 or older).
- Investments within the account grow tax-deferred.
- Contributions may be tax-deductible in the year they are made.
- The IRS requires individuals to begin taking money out of the account at age 72. (People who turned 70½ in 2019 or earlier were required to start distributions then.)
- Unqualified withdrawals before age 59½ may trigger a 10% early withdrawal penalty and income taxes.
- Withdrawals in retirement are taxed as ordinary income.
By maximizing your IRA contributions at the beginning of the year you enable those funds to start growing that much sooner. You generally have until April 15 to make a Traditional or Roth IRA contribution for the previous tax year. One way of getting a bigger tax refund is by maximizing your IRA contributions.