IRA Rules

Archive for May, 2005

Question: Roth IRA: Amount to start one?

Im 20 years old and have recently had a few financial breaks come my way such as rent cost cut in half along with the rest of my utilities and not having to take out loans for college in the fall due to a federal pell grant which i dont have to pay back.

I will be saving approximately $400/month and have taken an intrest in possibly opening a Roth IRA though i dont know all the rules well enough to make a solid decision. One of my biggest questions about the Roth IRA is if there is a monthly amount i am required to keep contributing and if so, how much is that amount? another question i have is If at some point i would like to withdrawl parts of this investment, will i be penelized, fined, etc.?

Any and all information is appreciated, as i know there are plenty more facets of financial investment for me to learn about.

THANK YOU!!

Answer: A Roth is an excellent way to save money for your retirement – your money will grow tax free and when you finally withdraw the money when you’re old it’ll be tax free too – with no required withdrawals. Your direct contributions to the IRA can be withdrawn after 5 years (but not the gains) without penalty.
The amount to start an account varies on where you establish it with. Some just require a one time minimum, others like Schwab can do it for much less but require monthly contributions.
Please note that you can only make a Roth if you earn the money for it – if you have no job you can’t start one.
You first need to pick a company to invest through. Some of the best are Vanguard, T. Rowe Price, Fidelity, and Schwab. Avoid the big banks like the plague. Don’t let them rip you off with loads (sales charges) and fees. Check how much the company charges you as an expense ratio. A good one might charge you 0.2-0.8 %. If they charge more than 1% than go somewhere else. And if they charge any kind of 12b-1 fee, hold on to your wallet and RUN.
Start with some basic books to teach you the fundamentals. Three excellent books are The Complete Idiot’s Guide to Investing, Investing for Dummies, and Mutual Funds For Dummies. You can probably find them in your local library.

Self Directed IRA Part 6 Private Lending

Question: IRA Withdrawal Timetable for First Time Home Owner?

We’re in the process of closing on a house, and had planned to use money from our IRAs to put towards the down payment and closing costs, as allowed as a qualified earlier distribution. However, we’ve hit an odd snag with my wife’s IRA, and we may not be able to receive the IRA distribution before the date of closing. If the IRA funds do not clear into our account until after the date of closing, can we still consider those funds as being used for that purpose, or does that prevent us from being able to use the exception?

Answer: First of all, congrats!

The withdrawal does not have to specifically apply to down payment or closing cost.

You can take a distribution for up to 10K penalty free, your wife can do the same, just make sure your IRA custodian/trustee report the distribution as one that meets an exception to the early withdrawal penalty.

$8000 Tax Credit for First Time Home Buyer Loan – Buy Foreclosures – RealEstateMarketingThisWeek.com

IRA (Individual Retirement Accounts)

There are exactly three classifications of Individual Retirement Accounts(IRA)s for individuals.

1. Traditional IRA (Traditional individual retirement account)
2. Roth IRA (Roth individual retirement account)
3. IRA Rollover (Rollover individual retirement account)

Throughout this Ira Rules website, we will completely explore these different types of Individual retirement accounts (IRA), along with IRA s that are more suitable for businesses such as SEP IRA and SIMPLE IRA. To continue learning about Ira Rules of these three types of individual retirement accounts, please use the side menus.

With the current Social Security and social security benefits situation, many people have to rely on their own retirement plans such as 401k retirement accounts, 403b retirement plans, and individual retirement accounts, instead of their Social Security benenfits. In many cases, 401k retirement account or employer retirement plans are not enough for people to retire on. They need to supplement their retirement income by investing in individual retirement accounts (IRA).

How many IRA accounts can I open?

With the current Ira Rules, you can open more than one IRA account. If you are eligible to open an IRA, then you can open as many IRA as you wish.

For example, you can have 2-3 Traditional IRA accounts and a few Roth IRA accounts. However, the drawback is that you will have to keep track of all your IRA accounts yourself. If you have many IRA accounts, this can be cumbersome when it comes to filing taxes and reporting to the IRS. Many people with more than a few individual retirement accounts find themselves losing track of what investments they own in which IRA after a while.

The IRS does not mind how many IRA accounts anyone has. What the IRS minds is how much you have contributed to your IRA accounts in total in any one year and whether you are taking required minimum distributions (RMD). If you have 3 IRA accounts and your maximum IRA contribution is $4,000 per year, then you can only contribute $4,000 to your IRA accounts. How you distribute that $4,000 among all your individual retirement accounts is up to you.

Investment Tax Deferred

One of the benefits of IRA accounts is the tax advantage. Under traditional Ira Rules, for Traditional IRA accounts, you can contribute (put money into your IRA account) tax deferred. Traditional Ira Rules allow you to put money into your Traditional IRA tax deductible. Under Roth IRA rules, for a Roth IRA, your contribution is taxed but when you withdraw money out of the Roth IRA, the withdrawn money is tax free.

• Traditional IRA
• Traditional Ira Rules
• Roth IRA
• Roth IRA rules
• IRA Rollover
• Rollover Ira Rules
• SEP Ira Rules