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What else can I help you with?
Do you have to pay fica when taking an IRA distribution?
No. IRA distributions may be subject to income tax only.
Can you transfer equities from a traditional IRA to a Roth IRA for your required minimum distribution?
Yes, you can do that. You'll obviously pay on the RMD from the normal IRA and then make a contribution to the Roth. However, there are many limits on who can contribute to a Roth and those would still be in effect. (Which normally makes it unfeasible). For for more details you should discuss with your own IRA administrator.
What happens if you withdraw your IRA between age 59.5 to age 70.5?
If you withdraw from your IRA between ages 59.5 and 70.5, there are no penalties for early withdrawal. However, you will still need to pay income taxes on the withdrawn amount. Once you reach age 70.5, you will be required to start taking minimum distributions from your traditional IRA.
Can you convert a simple IRA to a roth IRA?
Yes, you can roll a regular IRA into a Roth IRA. You pay income tax on the amount you withdraw from the regular IRA, but do not have to pay a penalty for early withdrawal if you roll the money directly into the Roth IRA.
What are the penalties for closing an IRA?
Besides the taxes you will have to pay on the lump sum distribution, there is a 10 percent penalty if you are younger than 59-1/2 years of age.
What are some of the rules of IRA distribution?
Some rules regarding the IRA distribution include the way the funds can be used. For early withdrawals, they can be used as a down payment for first time home owners and for educational funding. There are normally penalties one must pay if the funds are not returned back to the account within an allotted time frame.
Do you have to pay income tax on IRA income?
On a standar IRA, Yes (you didn't pay tax on the $ contributed or as it grew). On a Roth IRA, (where you paid the tax on the income before contribution), No.
When do you pay taxes on an IRA?
In the year that you start taking distributions from your IRA account.
What is the difference between Roth IRA and a traditional IRA?
A Roth IRA is funded with after-tax money and you do not pay taxes when you withdraw the money. A Traditional IRA is funded with pre-tax money and you pay taxes when you withdraw the money.
Do you pay federal income tax on Roth IRA income if withdrawn at age 50?
Yes when you take non qualified distributions. If you receive a distribution that is not a qualified distribution, you may have to pay the 10% additional tax on early distributions under the age of 59 1/2. You do not include in your gross income qualified distributions or distributions that are a return of your regular contributions from your Roth IRA(s). IRS Publication 590 has the details available. about this.
Traditional IRA vs Roth IRA?
IRAs are investment vehicles that allow you to save on a tax-advantaged basis for your retirement years. If you begin saving at an early age, you can earn enough money through the appreciation of your investments and compounding interest to enjoy a comfortable retirement. The biggest difference between the Traditional IRA and the Roth IRA is how, and when, the tax advantages are available. When you open a Traditional IRA, you can make an immediate contribution that is, in most cases, tax deductible. For example, if you make a $5,000 contribution to your IRA in 2012, then your taxable income for 2010 drops by $5,000. You are not required to pay taxes on this account as it grows in value. Taxes are only assessed when you withdraw the funds. If you make less money in retirement than you did while working, then you will end up paying less in taxes than you would have otherwise. Keep in mind that if you withdraw the funds before the federally mandated retirement age of 59 1/2, you will pay a 10 percent penalty, as well as taxes on the amount you take. A Roth IRA is similar to the Traditional with only a few exceptions. The main difference is that you pay your taxes on the Roth IRA upfront, when you deposit funds into the account. After that, if you leave the money in your account and withdraw it after your retirement age, you will not pay any taxes. This type of account is beneficial for someone who expects to have a higher level of income in retirement than they did while employed. Another difference between the two accounts involves the Minimum Required Distribution (MRD). The MRD is required when you turn 70 1/2 in a Traditional IRA. This entitles the government to recoup some of the tax money that they have deferred all these years. Since the taxes in a Roth IRA were paid in the beginning, the MRD is not required in that type of account.
Is a roth IRA a potentially tax free account?
Nothing is tax free. On a Roth IRA you pay the tax on the money the year you put it into the IRA. You are supposed to be able to withdraw it from the IRA without paying tax on it. In a regular IRA you put the money into an IRA and do not pay tax on it when you put it in. You pay the tax on it when you withdraw it. The idea behind the regular IRA is that you will pay taxes in old age when your income is down. The idea behind the Roth is that the government can get money from you now. You have to decide which you think is better in your particular situation.
