{"id":5884,"date":"2021-09-07T10:00:00","date_gmt":"2021-09-07T15:00:00","guid":{"rendered":"https:\/\/hoorfarlaw.com\/blog\/?p=5884"},"modified":"2021-08-25T15:46:15","modified_gmt":"2021-08-25T20:46:15","slug":"retirement-and-taxes-the-basics-of-iras","status":"publish","type":"post","link":"https:\/\/hoorfarlaw.com\/blog\/?p=5884","title":{"rendered":"Retirement and Taxes: The Basics of IRAs"},"content":{"rendered":"\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-flow wp-block-group-is-layout-flow\">\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-flow wp-block-group-is-layout-flow\">\n<p>Individual Retirement Arrangements (IRAs) provide tax incentives for people to make investments that can provide financial security for their retirement. These can be set up with a bank, life insurance company, mutual fund, or stockbroker.<\/p>\n\n\n\n<p>What you should know:<\/p>\n\n\n\n<p><strong>Contribution: <\/strong>The money put into an IRA. There are annual limits to these contributions that depend on age and type of IRA. Generally, a taxpayer or their spouse must have earned income to contribute to an IRA.<\/p>\n\n\n\n<p><strong>Distribution:<\/strong> The amount withdrawn from an IRA.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"alignright size-full is-resized\"><a href=\"http:\/\/hoorfarlaw.com\/blog\/wp-content\/uploads\/2012\/03\/ira.jpg\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/hoorfarlaw.com\/blog\/wp-content\/uploads\/2012\/03\/ira.jpg\" alt=\"\" class=\"wp-image-644\" width=\"280\" height=\"186\" srcset=\"https:\/\/hoorfarlaw.com\/blog\/wp-content\/uploads\/2012\/03\/ira.jpg 425w, https:\/\/hoorfarlaw.com\/blog\/wp-content\/uploads\/2012\/03\/ira-300x199.jpg 300w\" sizes=\"auto, (max-width: 280px) 100vw, 280px\" \/><\/a><\/figure><\/div>\n\n\n\n<p><strong>Withdraws: <\/strong>Taxpayers may face a 10% penalty and tax bill if they withdraw money before age 59 \u00bd unless they qualify for an exception.<\/p>\n\n\n\n<p><strong>Required distribution:<\/strong> There are requirements for withdrawing from an IRA:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Someone must start taking withdrawals from their IRA when they reach age 70 \u00bd.<\/li><li>If a person\u2019s 70<sup>th<\/sup> birthday is on or after July 1, 2019, they do not have to take withdrawals until age 72.<\/li><li>Special distribution rates apply for IRA beneficiaries.<\/li><\/ul>\n\n\n\n<p><strong>Traditional IRA<\/strong>. An IRA where contributions may be <a href=\"https:\/\/lnks.gd\/l\/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMzMsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMTA4MTguNDQ3MTA3MDEiLCJ1cmwiOiJodHRwczovL3d3dy5pcnMuZ292L3JldGlyZW1lbnQtcGxhbnMvaXJhLWRlZHVjdGlvbi1saW1pdHMifQ.XG9AManisr44pipMsYyVF8H_iDAhwv4g241VFJ8_7WY\/s\/855127662\/br\/111073835130-l\">tax-deductible<\/a>. Generally, the amounts in a traditional IRA are not taxed until they are withdrawn. &nbsp;<\/p>\n\n\n\n<p><strong>Roth IRA<\/strong>. This type of IRA that is subject to the same rules as a traditional IRA but with <a href=\"https:\/\/lnks.gd\/l\/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMzQsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMTA4MTguNDQ3MTA3MDEiLCJ1cmwiOiJodHRwczovL3d3dy5pcnMuZ292L3JldGlyZW1lbnQtcGxhbnMvcm90aC1pcmFzIn0.g4vkcC44mcobOgDx3a5M5vY8I1PzOzsrqOe7FYusr8s\/s\/855127662\/br\/111073835130-l\">certain exceptions<\/a>:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>A taxpayer cannot deduct contributions to a Roth IRA.<\/li><li><a href=\"https:\/\/lnks.gd\/l\/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMzUsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMTA4MTguNDQ3MTA3MDEiLCJ1cmwiOiJodHRwczovL3d3dy5pcnMuZ292L3B1YmxpY2F0aW9ucy9wNTkwYiJ9.7oQ4THD6qjMma1MgTg-pG0tjxNG6Jp_jxrr9oAIqJjM\/s\/855127662\/br\/111073835130-l\">Qualified distributions<\/a> are tax-free.<\/li><li>Roth IRAs do not require withdrawals until after the death of the owner. &nbsp;<\/li><\/ul>\n\n\n\n<p><strong>Savings Incentive Match Plan for Employees<\/strong>. This is commonly known as a <a href=\"https:\/\/lnks.gd\/l\/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMzYsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMTA4MTguNDQ3MTA3MDEiLCJ1cmwiOiJodHRwczovL3d3dy5pcnMuZ292L3JldGlyZW1lbnQtcGxhbnMvcGxhbi1zcG9uc29yL3NpbXBsZS1pcmEtcGxhbiJ9.ITT6zmRlOWBimJ5WjvDfCCowIzH_RQAVFM_CLnDlLoU\/s\/855127662\/br\/111073835130-l\">SIMPLE IRA<\/a>. Employees and employers may contribute to traditional IRAs set up for employees. It may work well as a start-up retirement savings plan for small employers. &nbsp;<\/p>\n\n\n\n<p><strong>Simplified Employee Pension<\/strong>. This is known as a <a href=\"https:\/\/lnks.gd\/l\/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMzcsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMTA4MTguNDQ3MTA3MDEiLCJ1cmwiOiJodHRwczovL3d3dy5pcnMuZ292L3JldGlyZW1lbnQtcGxhbnMvcGxhbi1zcG9uc29yL3NpbXBsaWZpZWQtZW1wbG95ZWUtcGVuc2lvbi1wbGFuLXNlcCJ9.GT0Pv7_t02svyziLvxedL5-euYEyEngQ4Cchw9sMu-o\/s\/855127662\/br\/111073835130-l\">SEP-IRA<\/a>. An employer can make contributions toward their own retirement and their employees&#8217; retirement. The employee owns and controls a SEP. &nbsp;<\/p>\n\n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-flow wp-block-group-is-layout-flow\">\n<p><strong>Rollover IRA<\/strong>. This is when the IRA owner receives a payment from their retirement plan and <a href=\"https:\/\/lnks.gd\/l\/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMzgsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMTA4MTguNDQ3MTA3MDEiLCJ1cmwiOiJodHRwczovL3d3dy5pcnMuZ292L3JldGlyZW1lbnQtcGxhbnMvcGxhbi1wYXJ0aWNpcGFudC1lbXBsb3llZS9yb2xsb3ZlcnMtb2YtcmV0aXJlbWVudC1wbGFuLWFuZC1pcmEtZGlzdHJpYnV0aW9ucyJ9.EnwOpVuTHpvdLsPs6V_F8TVMXzgAJ_T3FKzPHTRdaeU\/s\/855127662\/br\/111073835130-l\">deposits it into a different IRA<\/a> within 60 days.<\/p>\n\n\n\n<p class=\"has-text-align-right\" style=\"font-size:12px\">Courtesy of IRS<\/p>\n<\/div><\/div>\n<\/div><\/div>\n<\/div><\/div>\n\n\n\n<p><strong>If you need help with taxes, please reach out to our office by phone at (816) 524-4949 or our website at <a href=\"https:\/\/www.hoorfarlaw.com\/\">Hoorfarlaw.com.<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Individual Retirement Arrangements (IRAs) provide tax incentives for people to make investments that can provide financial security for their retirement. These can be set up with a bank, life insurance company, mutual fund, or stockbroker. What you should know: Contribution: &hellip; <a href=\"https:\/\/hoorfarlaw.com\/blog\/?p=5884\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[63,16,36,131],"class_list":["post-5884","post","type-post","status-publish","format-standard","hentry","category-general","tag-ira","tag-irs","tag-retirement","tag-taxes"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/hoorfarlaw.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/5884","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hoorfarlaw.com\/blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hoorfarlaw.com\/blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hoorfarlaw.com\/blog\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/hoorfarlaw.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5884"}],"version-history":[{"count":5,"href":"https:\/\/hoorfarlaw.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/5884\/revisions"}],"predecessor-version":[{"id":5996,"href":"https:\/\/hoorfarlaw.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/5884\/revisions\/5996"}],"wp:attachment":[{"href":"https:\/\/hoorfarlaw.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5884"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hoorfarlaw.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5884"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hoorfarlaw.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5884"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}