Like any other type of investment accounts, the IRA, or Individual Retirement Account, is governed by certain IRA rules and regulations which serve as guidelines in managing one’s investment funds. IRA rules refer to the guidelines when it comes to the contributions to different types of IRA plans, distributions and early withdrawals and its corresponding taxes and penalties, special considerations, income limits, and age limits.
There is more than one type of IRA plan available, such as the Traditional IRA, Roth IRA, SEP (Simplified Employee Pension) IRA, and SIMPLE (Simplified Incentive Matched Plan for Employees) IRA. But the very popular and common of these IRA plans are the Roth and Traditional IRAs. Different types of IRAs have different type of rules and regulations associated with them.
With a Traditional IRA, all employed individuals who are earning a taxable annual income may contribute, as long as they are under the age of 70 and 1/2 years. Maximum contribution for those investors under the age of 50 years by the end of the year is $5,000; and for those investors who are 50 years or older by the end of the year, they are allowed to make a maximum contribution of $6,000. Contributions to Traditional IRA are not taxed. However, its withdrawals and distributions are taxable like a regular income. IRA withdrawal rules for Traditional IRA allow those investors who are at least 59 and 1/2 years of age to take out money without being subjected to 10% penalty. Forced distributions at a minimum required amount starts when the investor turns 70 and 1/2 years old.
There same contribution limits for those below 50 years old and 50 years and above for Roth IRA. But the IRS (Internal Revenue Services) set a maximum income limit depending on the marital status of the investors. Since the contributions to a Roth IRA are taxed right away, all qualified distributions are not taxed. The investors must be at least 59 and 1/2 years old and the account must have lapsed the 5-year holding period in order to qualify. But there is no mandatory distribution now minimum required amount to withdraw with a Roth IRA.












