Independent Retirement Account Essay

Independent Retirement Account Essay

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Independent Retirement Account (IRA)

All living beings grow old with time and come to a stage when they can no longer make a living on their own. Be it animals or humans, it is a time when they have to depend on others for their survival. Yes, as human beings, there comes a time in our lives when we can no longer afford to live independently and have to make way for younger and much healthier individuals at work. So what does one do to earn a living?
There are quite a few possibilities of which Independent Retirement Account, or IRA as it is known in short is quite popular with Americans.
What is IRA? One web defines IRA as “the self-directed investment accounts that provide the incentive of tax-deferred (in the case of traditional IRAs) or tax-free (in the case of Roth IRAs) earnings on assets in the account” (FINRA, 2010).
Even in IRA, there are quite a few accounts available to individuals to operate which obviously depend on the investor’s financial goals and situations.
It all boils down to one’s knowledge, expertise and the way they see their investment returning tax-free benefits. Self-directed IRAs for example, provide large tax deductions, asset protection and estate planning benefits. However, one must understand the rules governing these retirement accounts before plunging into one. For self-directed IRA, the rules governing investment are:
• The prohibited investment types
• Self-dealing
• Indirect benefit rules
• Unrelated business income tax (UBIT) (
One of the more popular self-directed accounts is the Real Estate IRA. While there is no doubt that one’s investment advisor or custodian will try and sell you the best possible options with your investment, Real Estate IRA is undoubtedly a s...

... middle of paper ... loan on 401k if the employee has terminated service
4. Inability to do a Roth IRA conversion. If a retiree wants to convert all or a portion of the account to a Roth IRA, it has to be done outside of the 401(k) plan
Remember, in making a transfer, funds should go directly from the 401(k) plan to their new account. If a check is made out directly to the account holder, there will be a 20% mandatory tax withholding. Account owners under the age of 59 ½ will also have a 10% early withdrawal penalty (


Three Reasons to Transfer 401k Money into an IRA,

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