Am I Eligible to Have an IRA?

If you are under age 70 1/2 for the entire tax year and have earned income, you are eligible to establish an IRA, even if you already participate in certain government plans, a tax-sheltered annuity, a Simplified Employee Pension (SEP) plan, a Savings Incentive Match Plan for Employees of Small Employers (SIMPLE), or a qualified pension or profit-sharing plan established by an employer.

What Is Earned Income?

Earned income is the salary or wages you receive as an employee. If you are self-employed, earned income is your net income for personal services performed for the business.  All taxable alimony is considered earned income.  Interest, dividends, and most rental income and passive income sources and are not considered earned income.

What if I'm Not Eligible for a Deductible IRA Contribution?

You can still make nondeductible contributions to your IRA. You may also be eligible for a Roth IRA.

When Can I Withdraw Funds From My IRA Without Incurring Any IRS Penalties?

You can withdraw funds from your IRA without a 10 percent premature distribution penalty any time after you reach age 59 1/2. You can also avoid the premature distribution penalty before age 59 1/2 if you become disabled, if the distributions are part of certain periodic payments, for medical expenses in excess of 7.5 percent of your adjusted gross income, for health care insurance if you have been receiving unemployment compensation for at least 12 weeks, for distributions paid directly to the IRS due to IRS levy, for qualified higher education expenses, or for a first-time home purchase.  When you reach ages 70 1/2 you must begin to take minimum required distributions or servere tax penalties will apply.  

What Is a Spousal IRA?

The spousal IRA rules allow a married person to make an IRA contribution for his/her spouse. An eligible spouse can contribute the lesser of:  The maximum allowable contribution for the current tax year, or the total of both spouses' compensation for the tax year reduced by the higher compensated spouse's traditional IRA contribution and Roth IRA contribution for the year.  Catch-up contributions are available for spousal IRA arrangements and would increase the allowable contribution amounts.

How Do I Move Funds From One IRA to Another?

There are two methods you can use to move funds from one IRA to another: rollover and transfer. For a rollover, you have 60 calendar days following the date of receipt to rollover the distribution to another IRA.  Rollovers from IRAs may not occur more than once during a 12-month period (this rule applies to each separate IRA you own). A transfer occurs when the funds are moved from one IRA to another without you having control or custody of the funds.  There are no time or frequency limits on the number of transfers permitted.