IRA Rules

Posts Tagged ‘taxes’

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- Contributions can be withdrawn without taxes or penalties.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

Question: Does the 60 day rule apply to Roth IRA contributions?

Roth IRA contributions can be withdrawn at any time with no penalties. I am aware of the 60 day (and only once per 12 months) rule, but does this rule apply only to earnings or to all funds that are withdrawn (contributions and earnings)? Can I rollover contributions past the 60 days and/or more than once every 12 months?

Answer: The 60 day limit applies to ALL rollovers, whether to a Roth or a traditional IRA.

Reeling in the Years 1993-1