Individual Retirement Arrangements (IRAs) are a great supplemental way to save money for retirement. If you have earned income you can choose between opening the Traditional IRA or a Roth IRA, depending on your earned income for the year. IRAs including silver ira have a maximum contribution limit that may be contributed yearly. The contribution limit for 2013 is 100% of your earned income or $5,500.00, whichever is less. Individuals over the age of 50 can contribute an additional $1,000.00, for a total possible contribution of $6,500.00 in 2013.
Contributions to Traditional IRAs may be tax deductible – make sure to check with your tax advisor when you file your income taxes to see if the contributions would be tax deductible to you. Any type of withdrawal made from the Traditional IRAs are generally taxable during the year the withdrawal is made. The Roth IRA or gold ira rollover is not tax deductible, but qualified withdrawals from the Roth IRA for may be withdrawn tax-free.
IRAs are meant as retirement savings, so most withdrawals prior to the age of 59 ½ will be taxed and have additional penalties associated with the withdrawal. The IRS does allow some exceptions for penalty-free withdrawals prior to the age of 59 ½. These can include, but are not limited to, certain expenses for qualified first time home purchases, expenses for higher education for you or a family member, and withdrawals due to disability.
Individuals with Traditional IRAs must begin taking a Required Minimum Distribution (RMD) in the year they turn 70 1/2 and in each year thereafter. The first RMD must occur by April 1st of the year following the year in which the IRA owner is 70 ½. Subsequent RMDs must occur by December 31st each year thereafter. It is important that a Traditional IRA owner take RMDs properly as the IRS assesses stiff penalties for not taking out the required distribution amount. Roth IRAs do not have Required Minimum Distributions.
IRAs serve an important piece of the retirement savings puzzle. Any individual interested in establishing an IRA should speak with their tax advisor with specific tax questions or read IRS rules governing IRAs in the IRS Publication 590. Do not attempt to open an IRA without first having this expertise on your side. It is a wonderful way to save or enhance the current savings for the best possible retirement in the future. Do not miss out on what is available to you.