IRA Account RulesThe IRA account rules and regulations can get a little tricky, especially since there are many different types of these personal assets. But below is a list of different IRA (Personal Retirement Account) Rules which you will find useful if you are looking to get into these Plans. An IRA is an investment plan which allows you to save money and have it grow tax defered until retirement. A traditional IRA is the most common plan which allows you to put money into it tax free and only have to pay taxes when you pull money out. A 401k allows you to invest money before it is taxed, While a Roth IRA allows you to avoid paying taxes on the profits you make. Each has it's own advantages and disadvantages. Opening an account is easy and can be done at any major discount broker. In order to contribute to a Roth IRA you must not exceed the income limits. For 2010 a single filer must make under $105,000 in order to contribute the maximum. A Roth IRA is a little different than a traditional IRA, the biggest difference being you must pay taxes on the money which you deposit but are allowed to take money out of it tax free provided you are over 59 ½ and have held the account for at least 5 years. If you take money out of your IRA before the age of 59 1/2 you will have to pay a small 10% penalty on any money you withdraw. Can I contribute to both IRA and 401k? In many cases the answer to this question is yes, but there are some restrictions. You may be able to switch money from your 401k to your IRA by doing something called an IRA Rollover. Traditional IRA vs Roth IRA, Who Wins There are two different options to choose from when investing in IRAs. So, which one is better? I depends on your situation, and where you think taxes will be in the future. There are a few advantages to Roth IRAs such as providing free retirement income and being a better option to use along side a 401k. Self Directed IRA Real Estate Investing Some plans allow you to buy real estate as an investment. These normally come with some additional rules you must follow. If you have inherited an IRA there are certain IRA account rules to follow and you have a few options available to you. When do you pay taxes on a Roth IRA When you invest into a Roth IRA you pay your taxes up front. When you take the money out you no longer have to pay taxes on it because you already did. How Much can My Spouce Contribute to an IRA? If you are married both you and your partner may contribute to an individual retirement account. You may also contribute to your spouse's IRA during certain times. Using a Roth IRA as Your Emergency Fund There are several advantages and disadvantages of using a Roth IRA as an emergency fund. Modified Adjusted Gross Income The IRA account rules take into consideration your MAGI to determine your IRA eligibility. Other Articles Go from IRA account rules to 401K information
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