Individual Retirement Accounts
The Individual retirement account is also known as IRA. It is a type of retirement plan account. This is one of the accounts which has some of its advantages for the retirement savings in the United States of America. There is also a legal basis for the individual retirement account as well. There are also certain things which are known as individual retirement annuities.
There are various types of Individual retirement Account. Some of these are either employer-provided and some of them are self-provided plans. Some of these types of individual retirement account include the following:
Roth IRA - This is a major form of IRA. This is made with the help of the contributions made with after-tax assets. The all transactions which are found in the IRA have no tax impact. The withdrawals are also tax-free. This is one of the types which has been named after the Senator William Roth.
Traditional IRA - This is also a major type of individual retirement account. The contributions are often tax-deductible as well. All the transactions as well as the earnings within the IRA have no tax impact. The withdrawals after the retirement are taxed in the income.
SEP IRA - This is also a types of individual retirement account. It is a provision which allows any employer especially small business as well as self-employed individual to make different retirement plan contributions into the name of the employee. This is instead of a pension fund account in mane of the organization.
SIMPLE IRA - This is also a type of individual retirement account. This is a simplified employee pension account that allows both the employee and employer's contributions. This is one of the plans similar to a 401(k) plan. But the difference lies in the lower contribution limits as well as simpler administration. This is one of the plans which is treated separately.
Self-Directed IRA - This is also a individual retirement account. This is known as a self-directed IRA that allows the account holder to make contributions on behalf of the retirement plan.
There are various types of funding schemes for the individual retirement account. Some of these are mentioned below. have a look and know more:
An Individual retirement account can be funded with cash as well as cash equivalents. This is one of the cases where attempting to transfer any other type of asset into the IRA is not allowed and it disqualifies the fund from its tax treatment.
There are various Rollovers, transfers as well as conversions that are done between IRAs and other retirement accounts can also be included in any asset.
The maximum investment or funding for an IRA contribution in the years 2006 as well as 2007 is 100% of earned income. Other than this, the another scheme is $4,000, whichever is less, for an individual who is less than 50 years of age.
In certain cases if the Individuals are aged than 50 years as well as older, they can contribute up to 100% of earned income or $5,000 whichever is less in total.
There are various funding limits for Roth IRAs as well as traditional IRAs and also the combination of the two. You cannot put excess amount than $4,000 into your Roth and traditional IRA combining both.