Having an IRA is a great idea for your retirement. There are some rules and regulations that you need to be aware of if you are going to open an IRA for your retirement. Here are some things to avoid if you have or are planning on opening an IRA account.

Putting Away Too Much

Depending on your age there is a maximum amount that you can put into all of your combined IRA accounts in a year. If you exceed this amount the IRS can issue a penalty against the additional money that is put into the IRA. Make sure to know what the contribution maximum is and don’t exceed that amount.

Early Withdrawal

There are also strict laws about when and how money can be withdrawn from an IRA. Typically you can begin withdrawing money from an IRA after the age of 59 ½ without incurring a penalty. If you withdraw before then there is an 10% penalty that can be assessed. However, there are certain circumstances that will allow you to avoid the penalty if you must withdraw from your IRA. Make sure you know what those circumstances are before an early withdrawal.

Contributing after 70 ½

Once you have passed the age of 70 ½ you are no longer allowed to contribute to your IRA. This applies even if you are still working. Make sure to stop automatic contributions if you are over this age.

For legal assistance with retirement or estate planning, contact Stano Law group.