Individual Retirement Account (IRA) – Ten Facts
The individual retirement account, or IRA, is a mystery to many people. You have probably heard the term “IRA” for a long time now. You might have considered getting an IRA, or retirement investment account. But do you even know what an IRA is? If you’re like most people, even if you’re planning for retirement, you don’t know anything about IRAs. While we know we can’t educate anyone on IRAs in this short article, we can offer a bit of insight as to what you should know about the Individual Retirement Account, or IRA.
Individual Retirement Account FAQ: Ten Facts
1. There are different types of IRAs. These can be either provided by an employer or these can be “self-provided” plans. They include the (well-known) Roth IRA, traditional IRA, SEP IRA, SIMPLE IRA, and the self-directed IRA.
2. An IRA can only be funded with cash (or the equivalent of cash) otherwise you lose tax benefits.
3. An IRA owner cannot borrow money from the IRA.
4. You are required to take the minimum distribution from your IRA each year after you reach age 70.5.
5. In general, IRA money is safe from lawsuits and bankruptcy rulings.
6. Divorce does not automatically entitle a spouse to IRA money – but the possibility exists.
7. You have to be 59.5 years of age to take money out of an IRA.
8. Usually you cannot take money out of an IRA before age 59.5 without penalties – but exceptions apply for special situations.
9. Individual names are placed on IRAs – not spouse’s names. However, most of the time spouses are entitled to half anyway.
10. IRAs can be transferred from one investment manager to another and from one employer to another.