An IRA (Individual Retirement Account)

An individual retirement account allows you to put away money for retirement and the IRS helps you do it by letting you pay less taxes based on the amount that you invest.  This is in addition to Social Security and/or your Employer Retirement Plan.

IRS Publication #590, explains how your allowed you to save for Retirement – Tax Deferred.   We generally fund them with Annuities  It’s like a bank account, but with an Insurance Company and it can give you a GUARANTEED income for life.

Annuity Proposal

How Are a Traditional IRA and a Roth IRA Different?

Official IRS Pamphlet on Business Retirement Options # 3998

If you ever worked for a company or put money into a plan, but do not remember where it is, etc. try these ideas to locate your missing retirement funds.

Annuity Proposal

Contributions – Deductible

  • Contributions you make to an IRA may be fully or partially deductible, depending on which type of IRA you have and on your circumstances; and
  • Generally, amounts in your IRA (including earnings and gains) aren’t taxed until distributed. In some cases, amounts aren’t taxed at all if distributed according to the rules.  IRS.gov Publication 590 * 

See Publication 560 for Small Biz Retirement plans

Covered CA MAGI Income - Contributions & Retirement Income

Steve talks about retirement

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Power of Tax Deferral -
from North American Brochure  
Tax Deferral

Publication 590 A
Contributions to IRA's 

Traditional IRAs

Who Can Open a Traditional IRA?
When Can a Traditional IRA Be Opened?
How Can a Traditional IRA Be Opened?
How Much Can Be Contributed?
When Can Contributions Be Made? 
How Much Can You Deduct?
What if You Inherit an IRA?
Can You Move Retirement Plan Assets? 
When Can You Withdraw or Use Assets? 
What Acts Result in Penalties or Additional Taxes? 

Roth IRAs

What Is a Roth IRA?
When Can a Roth IRA Be Opened?
Can You Contribute to a Roth IRA? 
Can You Move Amounts Into a Roth IRA?

Retirement Savings Contributions

Credit (Saver's Credit)

 

 

Pension & Annuity Income - Publication 575
Pension & Annuity Income - Publication 575

IRS Types of Retirement Plans

Individual Retirement Arrangements (IRAs)

Roth IRAs 401(k) Plans 403(b) Plans

SIMPLE IRA Plans (Savings Incentive Match Plans for Employees)

SEP Plans (Simplified Employee Pension)

SARSEP Plans (Salary Reduction Simplified Employee Pension)

Payroll Deduction IRAs

Profit-Sharing Plans Defined Benefit Plans

Money Purchase Plans

Employee Stock Ownership Plans (ESOPs)

Governmental Plans 457 Plans

409A Nonqualified Deferred Compensation Plans

Help with Choosing a Retirement Plan

2 comments on “IRA – Individual Retirement Account

    • IRA Hardship Withdrawal Rules

      The IRS allows you to make penalty-free withdrawals from your traditional IRA once you reach age 59.5. Otherwise, you’d owe a 10% early withdrawal penalty in addition to ordinary income taxes. However, the IRS waives the 10% penalty in certain situations. Generally speaking, you can take an IRA hardship withdrawal to cover the following expenses:

      Unreimbursed medical expenses that exceed more than 7.5% of adjusted gross income (AGI) or 10% if younger than 65
      Qualified higher education expenses
      Purchasing your first-home that doesn’t exceed $10,000
      Certain expenses if you’re a qualified military reservist called to active duty
      But keep in mind that traditional IRAs are tax-deferred savings vehicles. This means that you’d always owe income tax on any withdrawals you make. An IRA hardship withdrawal just spares you the 10% early withdrawal penalty.

      Plus, you can’t withdraw more than you need to cover your financial burden.

      IRA Hardship Withdrawals for Medical Expenses
      If you’ve racked up a serious medical bill, you may be able to tap into your IRA penalty-free to cover it. The IRS allows you to take a hardship withdrawal to pay for unreimbursed qualified medical expenses that don’t exceed 10%

      +++++++++This sounds backwards…+++++++++

      Medical Expenses
      You can qualify for an exemption from the IRA penalty tax if you used your IRA early withdrawal to pay medical expenses that are more than 10% of your adjusted gross income. https://www.thebalance.com/exceptions-ira-early-withdrawal-penalty-2388980

      of your adjusted gross income (AGI). This represents your taxable income minus specific deductions you claim such as student loan interest paid for the year.

      Fortunately, qualified medical expenses fall under a relatively large umbrella. It covers most medical, dental and vision treatments that diagnose, prevent or treat disease.

      The rules generally allow you to take an IRA hardship withdrawal to cover most annual checkups, prescriptions and surgeries. However, qualified medical expenses typically don’t include procedures you chose to take but don’t need such as most plastic surgeries.

      In addition, you have to take the IRA hardship withdrawal during the same calendar year that you incurred your medical bills. So let’s say you have surgery coming up next year. You can take the hardship withdrawal now as long as you use it to pay for the surgery before the end of the year. And that holds true even even if you won’t actually go through the procedure until next year. As long as you follow this rule, you can include those medical expenses in your tax return along with Form 5329 and avoid the 10% early withdrawal penalty.

      However, you don’t have to itemize deductions. https://smartasset.com/retirement/ira-hardship-withdrawal

      ******************************************************************

      Although not required, a retirement plan may allow participants to receive hardship distributions. A distribution from a participant’s elective deferral account can only be made if the distribution is both:

      Due to an immediate and heavy financial need.

      Limited to the amount necessary to satisfy that financial need.
      Immediate and heavy financial need
      The employer determines a participant has an immediate and heavy financial need based on the plan terms and all relevant facts and circumstances.

      Consumer purchases (such as a boat or television) are generally not considered an immediate and heavy financial need.
      A financial need may be immediate and heavy even if it was reasonably foreseeable or voluntarily incurred by the employee.
      A distribution is automatically considered to be necessary to satisfy an immediate and heavy financial need if all of the following requirements are met:

      The distribution isn’t greater than the amount of the immediate and heavy financial need, including the amounts necessary to pay any taxes resulting from the distribution.
      The employee has obtained all other currently available distributions (including distribution of ESOP dividends under section 404(k), but not hardship distributions) and nontaxable (at the time of the loan) plan loans, including all other plans maintained by the employer.
      The employee isn’t allowed to make elective deferrals to the plan for at least six months after the hardship distribution.https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-hardship-distributions

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