IRA Rules

Posts Tagged ‘irs’

Question: Do exitsting contracts remain valid after a corporate merger or buyout?

My bank was bought out by another bank. The new entity claims that rules regarding my IRA are no longer valid. Specifically, there will be interest penalties for moving my IRA to a different institution when there were no penalties in the previous agreement. What takes precedence, the existing contract or the new rules? I signed no agreements after the merger/buyout.

Answer: The new rules generally apply. Best bet is to call the Banking Regulatory department for the state where you live.

Banks are very highly regulated and they can easily have their licenses revoked or fined if they do anything illegal.

IRA fees, checking account fees, etc can pretty much be changed at any time, with proper notice to the account holder

Question: what does this mean?

What many people don’t realize is that once they reach 70, the decision to withdraw funds is no longer discretionary. A tax rule mandates you to take out a specified amount annually — known as a Required Minimum Distribution (RMD) — by Apr. 1 in the year after you turn 70. This sum is based on a Life Expectancy formula for you and a spouse who’s your beneficiary, and you must pay income tax on it. Failure to withdraw will get you a penalty of 50% of the amount you were supposed to have taken out. (There is no RMD for withdrawals from a Roth IRA, because your contributions to the account have already been taxed.)

Answer: This means your tax deferred retirement fund is used to provide iincome during retirement and not a way to leave more money for your heirs. You have to remove the money from your IRA and pay tax on it during your expeced life. You don’t have to spend the money if you don’t want to.

Why PGI SelfDirected vs. All the Other Guys