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IRA FAQ's

        IRA FAQ's         

There are a number of rules and regulations surrounding IRA investments, and the amount of information can often be overwhelming. This list of questions and answers has been assembled to make it easier to find the answers you are looking for.

Who can contribute to an IRA?

A traditional IRA can be opened by anyone with earned income who is under 70½. The Roth IRA can be opened by anyone with earned income, regardless of age, if their adjusted gross income for 2015 is below $116,000 (single) or $183,000 (joint).

A traditional IRA can be opened by anyone with earned income who is under 70.  

How much can I contribute to an IRA?

The maximum contribution to either a Traditional or Roth IRA is $5,500 or 100% of your earned income, whichever is less.  If you are age 50 or over, you are allowed an additional $1,000 "catch-up" contribution.
 

Can I invest in both Traditional and Roth IRAs?

Yes, as long as the total amount of your contributions does not exceed $5,500 (or $6,500 for age 50 and over). For example, if you were eligible to contribute $2,500 to a deductible IRA, you could also contribute $3,000 to a non-deductible IRA or Roth IRA.
 

What is the deadline for my IRA contributions?

The final deadline for making prior year IRA contributions is April 15. For example, a contribution for tax year 2015 may be made up until April 15th, 2016.
 

Is my spouse eligible for an IRA?

Yes, a non-working spouse is eligible to open either a Traditional or Roth IRA with a maximum contribution of $5,500.
 

Can a minor contribute to an IRA?

As long as the child has earned income, he or she can contribute to a minor IRA. It can be opened as a Traditional or Roth IRA, and the maximum contribution is $5,500 or 100% of earned income, whichever is less. To establish a minor IRA, the account must be opened and held by an adult, as guardian, in the name of the minor. While the adult is the individual authorized to perform transactions on the account, the minor is considered the registered owner for tax purposes.
 

If I'm self-employed, what other retirement saving options do I have?

If you are self-employed or own a small business, other options you may have include contributing to a Simplified Employee Pension IRA (SEP-IRA) or SIMPLE plan. 

When can I take funds out of my IRA?

Distributions from a Traditional IRA can be made penalty-free at 59½, and minimum required distributions begin the year you turn 70½. You can also take withdrawals from a Roth IRA once you are 59½, as long as the account has been in existence for at least five years. Unlike Traditional IRAs, there are no required distributions.

In most instances, if withdrawals are made before age 59½, there is a 10% early distribution penalty. However, there are situations where funds can be taken from an IRA without tax or penalty. You can withdraw funds from any IRA penalty-free to pay for a first-time home purchase or higher education. 

If the funds withdrawn from a Roth IRA are used for a first time home purchase, and the account has been open for at least five years, the withdrawal will also be tax-free. Certain exceptions also exist for circumstances involving death, disability, and medical expenses. 
 

If I take a distribution from my IRA, can I replace it without being penalized?

Once a distribution is taken from an IRA, you have sixty days from the time you receive the check to replace those funds and avoid any associated penalties or taxes. This type of rollover can be done only once every 365 days.

 

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