Basics You Need To Know About Traditional IRA Rules
When it comes to your Individual Retirement Account there are certain IRA rules that you must follow. There are Roth Rules, withdrawal and contribution rules, and the like. Following these rules is important, here are some basics.
There are specific guidelines that everyone should know when using the traditional IRA Rules for your retirement plan. Once you start looking into a plan that will be right for you it may become a little perplexing. You will need a good understanding of at least the basics and have a working knowledge of the consequences that each rule could have in your final funding which could amount to big money.
The rules for the IRA do change each year and it literally depends on the climate and a few other issues each year. The changes that took place for 2009 have to do with the amount of contribution that can be made according the age of the person contributing. For anyone under the age of forty-nine the contribution has a maximum of five and six thousand dollars and for those above the age of fifty in the same way.
The most important rule to understand is that no contributions may be made unless the person has had income in the previous year. The contributions you make are also affected by your marital status. The actual contributions may be made either jointly or singly but with new limits that were put in place in 2009. The new rule states that joint applicants with a combined income of over 166, 000 dollars will experience deductibles that are removed over the course of the year.
Traditionally the rules for IRAs have a contribution limit of not more than 5000 dollars which starts in 2009. If during the course of the year your employer has declared bankruptcy you will be allowed to contribute another 3000 dollars. If you are 50 years of age or older you may contribute 1000 dollars each year.
Your contributions will be fully deductible if you are not under a 401K retirement plan where you work or from any other source. Any money that is taken out before the person reaches the age of 70 will be considered a taxable income and may have penalties.
There are a lot more limitations which are applicable in specific situations like a widower or a widow, reservists who are active in the military, and adjusted gross income levels. Though this article focuses on traditional IRA rules Roth rules also apply and are different if you have a Roth account. Your specific situation needs to be considered carefully before you invest.
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Make sure that you don't risk your assets by not following the appropriate IRA rules. These can involve stiff penalties if not followed correctly, and remember that Roth rules also apply.