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

IRA vs. 401k: Diverse Knowledge for Adults

Retirement planning plays a critical role in ensuring a comfortable and secure future for individuals as they age. With an array of options available, understanding the nuances of the two most popular retirement accounts- Individual Retirement Account (IRA) and 401(k) plans, becomes crucial in making informed decisions. This investigation delves into the essential aspects of both IRA and 401(k) plans and offers a comparative analysis to assist individuals in making optimal choices to suit their specific financial requirements and goals, inclusive of maximizing their retirement savings, managing taxes, and adhering to pertinent regulations.

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2022 IRA Contribution Limits

There are new IRA rules for the year 2022. The IRS has increased the annual retirement plan contribution limit to $20,500.00 for 2022 (plus an additional $6,500.00 catch-up if you’re over age 50). All of your brokerage accounts should be automatically updated for 2022 and the contribution limit has been updated to $20,500.00.

This means that you can put an extra $1,000 per year towards your retirement funds – so make sure to go and update your contributions so that you max out your retirement limits.

2021 IRA Contribution Limits

The IRS has set the annual retirement plan contribution limit to $19,500.00 for 2021 (plus an additional $6,500.00 catch-up if you’re over age 50).

Make sure you review the new IRA rules and monitor your retirement plan and contributions yearly, and account for any contribution limit adjustments that you decide to make.

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.

2020 IRA Rules
2020 IRA Rules

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.
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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 →

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