All About IRAs
The Motley Fool Online (01/30/02) Vol. 30, No. 2 p.C1; Braze, Dave

In an article for The Motley Fool, Dave Braze reviews the rules governing IRAs. Husbands and wives are allowed to have an IRA, even if one of the two is unemployed. Under IRA guidelines, one person's annual contribution is limited to the lesser of the total taxable compensation or to the normal yearly amount whether made to one or more IRAs. Also, there is no minimum or required IRA contribution, and all earnings on the amounts in an IRA are tax-free until the funds are withdrawn. In the case of a Roth IRA, withdrawals may be tax-free if certain minimum rules are met. Contributions to a traditional IRA may be tax-deductible in the tax year made, depending on the owner's income tax filing status, adjusted gross income, and eligibility to participate in a tax-qualified retirement plan through employment, but contributions to a Roth IRA are not tax-deductible. The following are exceptions to the 10 percent penalty for an early withdrawal from an IRA account: the IRA owner's disability; the IRA owner's death; if there are a series of "substantially equal periodic payments" made over the life expectancy of the IRA owner; if it is used to pay for unreimbursed medical expenses that exceed 7.5 percent of adjusted gross income; if it is used to pay medical insurance premiums after the IRA owner has received unemployment compensation for more than 12 weeks; if it is used to pay the cost of a first-time home purchase; if it is used to pay for the qualified expenses of higher education for the IRA owner and/or eligible family members; and if it is used to pay back taxes because of an International Revenue Service levy placed against the IRA.

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