Q:

Who can contribute to an IRA?

A:

Quick Answer

Anyone who has taxable income can contribute to an IRA, according to Charles Schwab. Taxable income may come from wages, tips, disability benefits, benefits from a union strike or self-employment income.

Continue Reading

Full Answer

Individuals may only contribute to a traditional IRA until they reach the age of 70 ½, according to the Internal Revenue Service. People of any age may contribute to a Roth IRA.

During 2014 and 2015, the total amount an individual can contribute to her IRA accounts is $5,500 per year for anyone under the age of 50 and $6,500 for anyone age 50 or older, states the IRS. No one can contribute an amount greater than her taxable income. Contributions must be made by the tax deadline, so any 2014 IRA contributions must be made by April 15, 2015.

People with IRA accounts may begin withdrawing money from the account at any time, according to the IRS. Those with a traditional IRA must begin taking distributions the year after they turn 70 ½. The Roth IRA does not have a mandatory age when individuals must start taking distributions.

Withdrawals from a traditional IRA are considered taxable income, while withdrawals from a Roth IRA are not taxed, states the IRS. However, individuals might have to pay an additional 10 percent tax on both types of IRA accounts if they take distributions before the individual turns 59 ½ years old.

Learn more about Financial Planning
Sources:

Related Questions

  • Q:

    Can an estate inherited IRA be split?

    A:

    An estate-inherited IRA may be distributed to several individuals, says the Nest. IRA funds can be withdrawn and made part of the estate, or the account may be transferred to the beneficiary accounts.

    Full Answer >
    Filed Under:
  • Q:

    Should you rollover a pension to an IRA?

    A:

    Individuals who leave their employment or try to consolidate their retirement assets should consider rolling their pensions into an IRA, recommends U.S. News and World Report. This allows them to have greater control over the investment of their retirement funds.

    Full Answer >
    Filed Under:
  • Q:

    How do you transfer an IRA?

    A:

    To transfer an IRA, an individual needs to combine his assets into a single account, see if transferring assets in kind is an option, complete all necessary paperwork and make sure the funds arrive in the new account, according to Demand Media. Besides transferring, an individual can rollover his IRA.

    Full Answer >
    Filed Under:
  • Q:

    Can you borrow from your IRA?

    A:

    A person cannot borrow from his IRA, but he can take a tax-free rollover loan from his IRA account. He must repay this amount to a qualified IRA account within 60 days, or he loses the chance to return the money.

    Full Answer >
    Filed Under:

Explore