A traditional IRA is a tax-deferred account designed specifically for retirement savings. Anyone under the age of 70 1/2 who has earned income may establish and contribute up to $5,000, ($6,000 if age 50 or older) annually to an IRA.
- Contributions may or may not be income tax deductible.
- All earnings are tax deferred until withdrawn.
- IRAs decrease reliance on Social Security and pension programs as retirement income sources.
- There are expectations to enhance and strengthen IRA opportunities in future years.
- Must be less than 70 1/2 on the last day of the year in which the contribution is taken.
- Must earn income for services rendered as an employee or as self-employed.
- The lesser of 100% of income or $5,000.
- If age 50 or older, individuals may contribute an additional $1,000 as a catch-up provision.
- Individuals may contribute to an IRA up until April 15.
- Distributions must start by April 1 the year after the individual reaches 70 1/2.
Federal taxation of distributions
- Made after 59 1/2.
- Made after the owners death.
- Due to complete and permanent disability.
- Part of a series of similar equal payments in a manner approved by the IRS.
- For particular medical expenses.
- For particular health insurance premiums.
- For payment of higher education expenses.
- For purchase of first-time home buyer expenses approved by IRS.
The employees of Warren Wealth Management do not provide tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.