IRA Rules

Posts Tagged ‘paper’

Question: Questions regarding 401(k). 70 year old, still working?

Person was 70 on 12/25/07 and is still working full time. She has a 401(k) Profit Sharing plan where she works. Does she have to start taking out of it this year? 70 1/2 rule. Can she establish a Traditional IRA at her bank and roll it over to that, or would that make any difference? Any advice or details would be appreciated!

Answer: As long as you are still working, contributions can continue to that 401(k) and you don’t have to start withdrawals, but distributions must start on IRAs starting for the year during which you reach 70 1/2. If you then roll the money into an IRA, it’s no longer in a 401(k) with the company you are currently employed with, is it?

The penalty for not taking the Required Minimum Distribution is a whopping 50% of what you were supposed to have taken out.

Stocks, Mutual Funds & Retirement Investments : What Are the Rules of Short Stocking?

Question: What are the rules and benefits of a Roth IRA?

Answer: Rules:
- Your IRA must be maintained as a trust or custodial account at a bank, a federally insured credit union, a savings and loan association, or an entity approved by the IRS to act as trustee or custodian.
- Any regular contribution to an IRA (contributions other than conversions or rollovers) must be made in cash.
- You CAN NOT:
1. Borrow from your IRA or use it as security for a loan.
2. Sell property to your IRA, or buy property from it.
3. Buy property for your personal use with funds held by your IRA (before the funds have been distributed to you).
4. Invest your IRA in certain “collectibles.”

Benifits:
- Contributions can be withdrawn without taxes or penalties.
- Distributions, including capital gains, interest, and dividends are tax-free if you are at least 59 ½ and the account has been established for longer than five years.2
- You can contribute after age 70 ½ as long as you have earned income.
- No minimum distribution requirements during your lifetime.
- Tax-free benefits can be passed to your beneficiaries.

IRA Conversions