{"id":50413,"date":"2022-07-15T10:16:57","date_gmt":"2022-07-15T17:16:57","guid":{"rendered":"https:\/\/lapost.us\/?p=50413"},"modified":"2022-07-15T10:16:57","modified_gmt":"2022-07-15T17:16:57","slug":"iras-are-one-tool-in-the-retirement-planning-toolbox","status":"publish","type":"post","link":"https:\/\/lapost.us\/?p=50413","title":{"rendered":"IRAs are one tool in the retirement planning toolbox"},"content":{"rendered":"<p>IRS Tax Tip 2022-107<\/p>\n<p>There are many ways people plan for retirement. <a href=\"https:\/\/www.irs.gov\/retirement-plans\/individual-retirement-arrangements-iras\">Individual Retirement Arrangements<\/a>, or IRAs, are a common one. IRAs provide tax incentives for people to make investments that can provide financial security when they retire. These accounts can be with a bank or other financial institution, a life insurance company, mutual fund, or stockbroker.<\/p>\n<p><strong>\u00a0<\/strong><\/p>\n<p><strong>Here are some things to know about a traditional IRA.<\/strong><\/p>\n<p>A\u00a0<a href=\"https:\/\/www.irs.gov\/retirement-plans\/traditional-iras\">traditional IRA<\/a>\u00a0is a tax-advantaged personal savings plan where contributions may be tax deductible.<\/p>\n<ul>\n<li>Generally, the money in a traditional IRA isn\u2019t taxed until it\u2019s withdrawn.<\/li>\n<li>There are annual\u00a0<a href=\"https:\/\/www.irs.gov\/retirement-plans\/plan-participant-employee\/retirement-topics-ira-contribution-limits\">limits to contributions<\/a>depending on the person\u2019s age and the type of IRA.<\/li>\n<li>When planning when to withdraw money from an IRA, taxpayers should know that:\n<ul>\n<li>They may face a 10% penalty and a tax bill if they withdraw money before age 59\u00bd, unless they\u00a0<a href=\"https:\/\/www.irs.gov\/retirement-plans\/plan-participant-employee\/retirement-topics-tax-on-early-distributions\">qualify for an exception<\/a>.<\/li>\n<li>Usually, they must start\u00a0<a href=\"https:\/\/www.irs.gov\/retirement-plans\/plan-participant-employee\/retirement-topics-required-minimum-distributions-rmds\">taking withdrawals<\/a>from their IRA when they reach age 72. For tax years 2019 and earlier, that age was 70\u00bd.<\/li>\n<li>Special distribution rules apply for\u00a0<a href=\"https:\/\/www.irs.gov\/retirement-plans\/required-minimum-distributions-for-ira-beneficiaries\">IRA beneficiaries<\/a>.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><strong>Roth IRAs are like traditional IRAs, but there are some important differences.<\/strong><\/p>\n<p>A Roth IRA is another tax-advantaged personal savings plan with many of the same rules as a traditional IRA but there are <a href=\"https:\/\/www.irs.gov\/retirement-plans\/roth-iras\">exceptions<\/a>:<\/p>\n<ul>\n<li>A taxpayer can\u2019t deduct contributions to a Roth IRA.<\/li>\n<li><a href=\"https:\/\/www.irs.gov\/publications\/p590b\">Qualified distributions<\/a>are tax-free.<\/li>\n<li>Roth IRAs don\u2019t require withdrawals until after the death of the owner.<\/li>\n<\/ul>\n<p><strong>Here are a few other types of IRAs: <\/strong><\/p>\n<ul>\n<li><strong>Savings Incentive Match Plan for Employees<\/strong>. A\u00a0<a href=\"https:\/\/www.irs.gov\/retirement-plans\/plan-sponsor\/simple-ira-plan\">SIMPLE IRA<\/a> allows employees and employers to contribute to traditional IRAs set up for employees. It is suited as a start-up retirement savings plan for small employers not currently sponsoring a retirement plan.<\/li>\n<li><strong>Simplified Employee Pension<\/strong>. A <a href=\"https:\/\/www.irs.gov\/retirement-plans\/plan-sponsor\/simplified-employee-pension-plan-sep\">SEP IRA<\/a> is set up by an employer. The employer makes contributions directly to an IRA set up for each employee.<\/li>\n<li><strong>Rollover IRA<\/strong>. This is when the IRA owner receives a payment from their retirement plan and\u00a0<a href=\"https:\/\/www.irs.gov\/retirement-plans\/plan-participant-employee\/rollovers-of-retirement-plan-and-ira-distributions\">deposits it into a different IRA<\/a>within 60 days.<\/li>\n<\/ul>\n<p><strong>\u00a0<\/strong><\/p>\n<p><strong>\u00a0<\/strong><\/p>\n<p><strong>More information:<\/strong><\/p>\n<ul>\n<li><a href=\"https:\/\/www.irs.gov\/forms-pubs\/about-publication-590-a\">Publication 590-A, Contributions to Individual Retirement Arrangements<\/a><\/li>\n<li><a href=\"https:\/\/www.irs.gov\/forms-pubs\/about-publication-590-b\">Publication 590-B, Distributions from Individual Retirement Arrangements<\/a><\/li>\n<li><a href=\"https:\/\/www.irs.gov\/taxtopics\/tc557\">Topic No. 557, Additional Tax on Early Distributions from Traditional and Roth IRAs<\/a><\/li>\n<li><a href=\"https:\/\/www.irs.gov\/taxtopics\/tc413\">Topic No. 413, Rollovers from Retirement Plans<\/a><\/li>\n<li><a href=\"https:\/\/www.irs.gov\/taxtopics\/tc451\">Topic No. 451, Individual Retirement Arrangements<\/a><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>IRS Tax Tip 2022-107 There are&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-50413","post","type-post","status-publish","format-standard","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/lapost.us\/index.php?rest_route=\/wp\/v2\/posts\/50413","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lapost.us\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lapost.us\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lapost.us\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/lapost.us\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=50413"}],"version-history":[{"count":1,"href":"https:\/\/lapost.us\/index.php?rest_route=\/wp\/v2\/posts\/50413\/revisions"}],"predecessor-version":[{"id":50414,"href":"https:\/\/lapost.us\/index.php?rest_route=\/wp\/v2\/posts\/50413\/revisions\/50414"}],"wp:attachment":[{"href":"https:\/\/lapost.us\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=50413"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lapost.us\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=50413"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lapost.us\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=50413"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}