What Is IRS Publication 590: Individual Retirement Arrangements (IRAs)?

IRS Publication 590, entitled "Individual Retirement Arrangements (IRAs)" refers to an IRS document that outlines rules for individual retirement accounts (IRAs). The document, published by the Internal Revenue Service, provides information on how to set up an IRA, how to contribute to it, how much may be contributed, how to treat distributions and how to take tax deductions for contributions made to IRAs. IRS Publication 590 also provides information on penalties that taxpayers might face if IRA regulations are not followed properly.

Key Takeaways

  • IRS Publication 590 explains the tax rules and guidelines for individual retirement accounts (IRAs).
  • This IRS document also includes information on how to set up an IRA, how much you can contribute, and more.
  • IRS Publication 590 is in two parts — Part A and Part B, which cover IRAs and distributions.

Understanding IRS Publication 590: Individual Retirement Arrangements (IRAs)

While IRS Publication 590 specifies "individual retirement arrangements," that term is meant to broadly represent a wide variety of individual retirement accounts, individual retirement annuities, and other trusts or custodial accounts that act as a personal savings plan that provides tax advantages for setting aside money for retirement. IRS Publication 590 has two parts. Part A covers contributions to individual retirement arrangements, and Part B covers distributions from individual retirement arrangements. There are significant differences between the various retirement accounts covered in IRS Publication 590, including Roth IRAs and traditional IRAs, especially when it comes to the tax treatment of contributions. The publication covers:

  • Who can open a traditional IRA or Roth IRA
  • When a traditional IRA or a Roth IRA may be opened
  • The definition of a Roth IRA
  • How to open a traditional or Roth IRA
  • How much may be contributed
  • When contributions can be made
  • How much may be deducted
  • IRA inheritance rules
  • Moving of retirement assets
  • Asset withdrawal rules
  • Acts that trigger penalties or additional taxes

IRS Publication 590: Individual Retirement Arrangements: New Items

IRS Publication 590 often outlines new rules or provisions, such as those that offer relief to disaster victims. For example, in the tax year 2017, it named a qualified disaster tax relief provision that covers "tax-favored withdrawals and repayments from certain retirement plans for taxpayers who suffered economic losses" as a result of Hurricane and Tropical Storm Harvey, as well as Hurricanes Irma and Maria, and the California wildfires.

Other items for 2017 included:

  • New information for the treatment of unrelated business income in an IRA;
  • A modified AGI limit for traditional IRA contributions;
  • A modified AGI limit for certain married individuals;
  • A modified AGI limit for Roth IRA contributions.

In 2018, there were increases to the AGI limits across the board, as well as an extended rollover period for certain plan loan offsets and a disclosure disallowing recharacterization of conversions made in 2018 or later.

There are significant differences between the various retirement accounts covered in IRS Publication 590, including Roth IRAs and traditional IRAs, especially when it comes to the tax treatment of contributions.