USA IRS : Data that help taxpayers understand personal savings plans for retirement (IRA)

By | October 5, 2018
(Last Updated On: October 6, 2018)

Data that help taxpayers understand personal savings plans for retirement (IRA)

Personal savings plans for retirement – better known simply as IRAs (English) – are savings plans to provide financial security in retirement. A taxpayer can establish an IRA with:

  • bank or other financial institution
  • life insurance company
  • Investment fund
  • broker

Here are some terms and definitions related to IRAs to learn more about how the plans work:

Traditional IRA: Contributions to a traditional IRA may be tax deductible (in English). Savings from a traditional IRA are not taxed until you withdraw from the account.

Savings Incentive Plan for employees: Known as SIMPLE IRA (in English). It allows employees and employers to contribute to traditional IRAs established for employees. It is ideal as a retirement savings plan for small employers who do not sponsor a retirement plan.

Simplified employee pension: Best known as a SEP-IRA (in English) is a written plan that allows an employer to make contributions to their own retirement and your employees without getting involved in a qualified plan more complex. A SEP is owned and controlled by the employee.

Roth IRA: subject to the same rules as a traditional IRA with certain exceptions(in English). For example, a taxpayer can not deduct contributions to a Roth IRA. However, if the IRA owner meets certain requirements, qualified distributions (in English) are not taxable.

Contribution: The amount of money someone contributes to your IRA. There are limits to the amount (in English) that can contribute to your IRA annually; They are based on the age of the IRA owner and type of IRA.

Distribution: Essentially a retreat. This is the amount of savings that someone removed from your IRA.

Distribution required: A taxpayer can not keep retirement savings indefinitely. Generally, someone with an IRA must begin to withdraw (in English) when you reach age 70. Roth IRAs do not require withdrawals until after the death of the owner.

Reinvestment: This is when the IRA owner receives a payment retirement plan and deposited in another IRA (in English) within 60 days.

More information:

Refer USA IRS News

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