Questions About IRAs You Were Afraid To Ask

Are you interested in learning more about IRA accounts? If so, this article is for you. This blog post will provide answers to the following questions you must know about:

Questions About IRAs You Were Afraid To Ask

  1. What is an IRA?

An Individual Retirement Arrangement, also known as an IRA, has many different forms. The most common type of IRA is a traditional or contributory form that allows you to invest pre-tax dollars into the account and then be taxed on withdrawals in retirement.

  1. How do I open an IRA?

Many different companies will allow you to open a traditional or Roth type of IRA. If it offers IRAs as part of its benefits package, you can also have your company contact Vanguard, Fidelity, or T.Rowe Price and set up the account for you directly with them. Once you have selected a company you wish to open your account with, they will provide you with the paperwork required and walk you through opening an IRA.

  1. Do I have to open an IRA at the same company that my employer uses for their retirement plans?

No, you can open a traditional or Roth type of account with any financial institution. However, you may want to check into your benefits package and see if they offer a fee discount since many companies allow you access to lower-cost investment options.

  1. Can I have both an IRA and a 401(k) at the same time?

You can have both, but you are limited in how much total contribution you can make to both accounts. For example, you cannot contribute more than $5500 or $6500 if you are 50 years old and over for 2015 into either account, so your maximum annual contribution is $11,000 or $12,500.

  1. When can I withdraw from my IRA?

You can begin withdrawing funds upon reaching age 59 ½ without penalty. You will, however, have to pay income taxes on the withdrawal unless it is a Roth type of account.

  1. Can I withdraw money from my IRA while still working?

No, you cannot make a withdrawal until after age 59 ½ without penalty. However, there are exceptions for early access to funds in some cases if the individual is disabled or has reached age 55 and retired due to permanent disability.

In conclusion, there are many different types of IRAs that you can open if you do not have a retirement account at work. You may also want to check into your benefits package and see how much it would cost for you to set up an IRA directly with the investment company through them.

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