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Utilizing an IRA

You can open different kinds of IRAs with a variety of organizations. You can open an IRA at a bank or other financial institution or with a mutual fund or a life insurance company. You can also open an IRA through your stockbroker. Any IRA you open must meet Internal Revenue Code requirements, which are listed below for various arrangements.

Your Traditional IRA can be an Individual Retirement Account in an annuity. It can be part of either a Simplified Employee Pension (SEP) plan or an employer or employee association trust account. An Individual Retirement Account is a trust or custodial account set up in the United States for the exclusive benefit of you or your beneficiaries.

The account is created by a written document. The document must show that the account meets all the following requirements:

The trustee or custodian must be a bank, a federally insured credit union, a savings and loan association, an insurance company or an entity approved by the IRS to act as trustee or custodian.

The trustee or custodian generally cannot accept contributions of more than the deductible amount for the year. However, rollover contributions and employer contributions to a SEP can be more than this amount.

Contributions, except for rollover contributions, must be in cash.

You must always have a nonforfeitable right to the amount.

Money in your account cannot be used to buy a life insurance policy.

Assets in your account cannot be combined with other property, except in a common trust fund or common investment fund.

You must start receiving distributions from the IRA by April 1 of the year following the year in which you reach age 70½.

There are other ways to make sure that you’re benefiting from an IRA also. 

You can open an Individual Retirement Account in an annuity by purchasing an annuity contract or an endowment contract from a life insurance company. An individual retirement annuity must be issued in your name as the owner, and either you or your beneficiaries who survive you are the only ones who can receive the benefits or payments. A qualified employer retirement plan can maintain a separate account or annuity under the plan (a deemed IRA) to receive voluntary employee contributions.

An employee’s account can be treated as a Traditional IRA or a Roth IRA. For this purpose, a “qualified employer plan” includes:

A qualified pension, profit-sharing, or stock bonus plan (section 401(a) plan),

A qualified employee annuity plan (section 403(a) plan),

A tax-sheltered annuity plan (section 403(b) plan), and Individual Retirement Accounts

If you have any questions about your IRA, ROTH or retirement account, schedule a FREE consultation with Rukosky and Associates today by clicking here.

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