Understanding the Rules of an Individual Retirement Account
Individual retirement account or IRA is governed by a set of rules just as is the case with other type of investment plans. These rules define how owners can withdraw funds, especially when it concerns the timing and the exact amount of funds that the owner can withdraw.
As such individual retirement account rules are complicated you would do well to seek professional help when planning to withdraw your funds and so a certified public accountant, attorney or certified financial planner would be able to guide you in this regard.
Rules With Regard to Age
Furthermore, if you are not older than 59 years and six months in age you are allowed to access tax-deferred IRA distribution while not being penalized the ten percent penalty tax that the federal government would levy as long as the withdrawal that you make conform to exception rules of which there are seven that in turn deal with different situations and purposes.
What's more, in case your age is between 59 years and six months and 70 years and six months, you have two options when it comes to withdrawing funds from individual retirement account. The first option is withdrawing the total balance in your account while the second option is to withdraw only the amount that you require. However, neither option involves paying excise tax of ten percent though the amount withdrawn will be charged to your income and thus be liable for taxation.
Virtually everyone can open an individual retirement account which in fact is an excellent investment tool for retirement that also is not run by employers. If you want to open individual retirement account then you need to request a brokerage firm, bank or a financial institution for advice as to how to make your application and also how to contribute to the account.
The advantage to having individual retirement account is that upon retirement your individual retirement account will grow into being tax free until such time as you begin withdrawing any amounts from this account. Furthermore, everyone needs to consider certain factors that in turn will govern the type of individual retirement account that an individual is eligible for and among these factors you can include the type of your income and also whether you are participating in retirement plans that are sponsored by employers, and finally your age too is a determining factor.
Among the different kinds of individual retirement account available, you can include four different types that include the Roth IRA, traditional IRA, SEP IRA and simple IRA. The bottom line is that the individual retirement account is an investment account of great merit and to get the most out of it, you must seek help from a qualified professional.
