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Published on: August 30, 2013
The individual retirement account or IRA (Individual Retirement Account) is a type of retirement account. It provides tax benefits to people for retirement savings in the US. There are various kinds of IRAs and choosing one of them can be a confusing task. Given below are some of the most commonly asked questions that have been answered by Experts about IRAs.
Would a person have to pay a penalty if they withdraw money from an IRA fund to pay for Consolidated Omnibus Budget Reconciliation Act (COBRA) insurance?
An individual may not have to pay any penalty if he/she withdraws money from an IRA fund to pay for COBRA
Can a person use money from a retirement fund to pay for educational expenses?
A person may be able to use money from an IRA fund to pay for educational expenses. The money may be directly paid to the educational institution. The individual will also have to provide proof that the money was used for educational purposes.
Is money inherited from an IRA account taxable? Can a person move the inherited money into their own IRA?
Money inherited from an IRA account may be considered to be taxable income. The individual may not be able to move the inherited money into their own IRA account.
Can people contribute to an SEP/IRA plan based on the 1099 income?
A person may be able to contribute to a Simplified Employee Pension (SEP)/IRA plan based on the 1099 income if the individual reports the income as a sole proprietor or independent contractor on Schedule C.
Can an individual use their IRA funds to pay off credit card debts?
It may be possible to use the funds from an IRA account to pay off
credit card debts
. However, the person may be subjected to a penalty of 10% for withdrawing from the account before the age of 59 ½ years.
Can a person contribute to both an IRA and 401 (K) account at the same time?
An individual may be able to contribute to both the IRA and the 401 (K) accounts at the same time.
What is the difference between a Roth IRA and a regular IRA?
The main difference between a traditional and
is tax based.
, also known as qualified IRA is funds that are qualified for taxes. This means that, when the funds are withdrawn, all the funds will be subjected to tax. The funds in a Roth IRA, on the other hand, are already taxed.
Can an IRA account be held jointly by two people?
An IRA may not be owned jointly by two people. It can only be in the name of one person.
Can a person take a loan against a Roth IRA?
It may not be possible for a person to take a loan against a Roth IRA. However, if the individual withdraws from a Roth IRA, then those earnings may be subjected to taxes.
Retirement funds like the IRA have been set up in order to make sure that the individual has some financial security in his/her old age. Since there are so many different types of retirement funds available, it can get difficult to determine which of these plans suits your needs best. That is why it is important for you to be aware of all the kinds of IRAs that are available and what their specific features are. You may ask an Expert if you have any doubts about IRAs or need more information about them.
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