Category - IRAs

1
Understand The Basics of An IRA
2
Where Should You Establish Your IRA?
3
Mandatory IRA/401(k)/403(b) Withdrawals Have Been Eliminated for 2009
4
A Couple of Year-End Roth IRA Strategies
5
Further Note on Roth IRA Recharacterization/Conversion

Understand The Basics of An IRA

To start off, let’s talk about the basics of IRAs.  The following information holds true for both traditional IRA (TIRA) and Roth IRA (RIRA) plans.

IRA accounts can be held at a variety of institutions, from banks and credit unions, to brokerages and insurance companies.  Essentially, if it is a financial institution, quite likely there is an IRA offering.  Typically, an account is established by filling out an application, identifying yourself by name, address, and social security number.  You’ll be asked to name a beneficiary – a decision not to be taken lightly, but we’ll get to that issue a …

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Where Should You Establish Your IRA?

Establishing and contributing to an IRA (Traditional or Roth) is pretty simple and straightforward. There is a wide variety of institutions that offer IRA accounts:  banks, savings and loans, credit unions, insurance companies, mutual fund companies, and brokerages.  There are pros and cons to each type of institution, as we’ll list below.  These alternatives represent the major options for opening your IRA, in no particular order.

Banks, Savings and Loans & Credit Unions
Pros: Banks are well-known as some of the most stable and conservative institutions in our financial industry.  For many folks, this is an assurance that there is
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Mandatory IRA/401(k)/403(b) Withdrawals Have Been Eliminated for 2009

Just before Christmas of 2008, the president signed the Worker, Retiree, and Employer Recovery Act of 2008. The bill suspended 2009 Required Minimum Distributions (RMDs) for IRAs, 401(k)s and 403(b)s.

The intent of this change was primarily to give a break to retirees whose account balances probably cratered last year.  Normally, when a person turns 70½, he or she is required to begin withdrawing money from most kinds of retirement plans so that the IRS can collect its share of income tax.  In addition to being taxed as income, the funds removed lose the benefit of tax-free accumulation in the …

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A Couple of Year-End Roth IRA Strategies

With stock market indices down 30% or more from their January 1st levels, most investors are battered, bruised, and hoping for happier times. In the midst of a generally depressed stock market, there are still a couple of clever ways to make the most of a bad situation using a Roth IRA.

Roth Conversion
If your Traditional IRA account balance has been walloped by the vagaries of this year’s market and you intend to keep it invested in stocks or stock mutual funds, now is a good time to consider doing a conversion (or partial conversion) of the funds into …

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Further Note on Roth IRA Recharacterization/Conversion

In my earlier post on Roth IRA conversions, I noted that if you converted an IRA into a Roth earlier this year it may make sense to recharacterize the funds if the value of your account has slumped and you still owe taxes on the earlier, larger conversion amount. I also stated that you can’t go back this year and do another conversion. However, I realized that there is a way to sort of do a conversion/recharacterization/reconversion.

If you do a partial conversion of an IRA and later recharacterize it, you can do another partial conversion of different funds …

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