Individual Retirement Accounts (IRAs)

Individual retirement accounts (IRAs) are tax-advantaged retirement savings vehicles that you can set up yourself. Traditional, SEP, and SIMPLE (the only employer-established one) IRAs let you deduct contributions; Roth IRAs give you tax-free income; and all types let your investments grow tax-free until you withdraw them.

Frequently Asked Questions
  • Can I buy real estate in my IRA?

    Yes, you can, but only if you have a self-directed IRA (SDIRA). The real estate has to be for investment purposes, not personal use by you or family members. It can include single-family or multiple dwellings, apartment buildings and all kinds of commercial properties, as well as raw land. There are complex rules to follow; your IRA could be disqualified if you violate them.

  • How do IRA rollovers work?

    These transfers of funds from a retirement plan such as a 401(k) to an IRA require moving the assets either through direct transfer from custodian to custodian, or by liquidating the retirement account and sending you a check or direct deposit to a bank account (indirect rollover). Given stringent rules to keep rollovers tax free, a direct rollover is the better approach.

  • When can you withdraw from an IRA tax free?

    The only time you can withdraw from an IRA without paying taxes is when you’re withdrawing funds from a Roth IRA. Even with a Roth, until you are 59½ you owe taxes and a penalty on withdrawals of Roth earnings (but not contributions). It’s important to learn the rules to minimize early withdrawal penalties, as well as taxes.

  • How can I borrow from my IRA without paying a penalty?

    You can withdraw money from an IRA but not borrow from one. However, there is a special way that what amounts to a short-term loan is permitted. What you do is withdraw the money from an IRA account and repay it to either the same account or another qualified account within 60 days. This is technically not a loan, but a distribution followed by a rollover. Generally, you can do this type of rollover only once in a 12-month period.

  • Can I donate money from my IRA to charity?

    Yes, you can. And, if you’re taking money from an IRA on which you pay taxes on withdrawals (traditional, SEP, SIMPLE–but not Roth) there’s a tax benefit if you wait until you’re 70½ and withdraw IRA funds as a qualified charitable distribution (QCD). Even better, once you’re 72 and taking required minimum distributions (RMDs) from those accounts (again, not required from a Roth), your QCDs count toward your RMDs.That means you can take out less RMD money and owe less in taxes as a result. The recipient must be a qualified charitable organization. You can also make a charity a beneficiary of an IRA.

  • Can I add money to my IRA after I retire?

    It depends on how retired you are. If you are doing no work that qualifies as earned income, you can no longer add money to an IRA. However, if you are working part-time or have earnings from self-employment projects, those qualify. Investment, rental or pension income does not qualify as money you can add to an IRA.

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