
Open an IRA before the tax deadline to save on taxes
It’s not too late to get a tax deduction for your IRA contributions.
Annuitizing an IRA can give you early access to IRA funds. Bankrate explains.
Annuitizing an individual retirement account (IRA) is a process that allows a saver to take money out of an IRA account without paying tax penalties prior to the full retirement age of 59 ½ years. When an IRA is annuitized, equal monthly payments are dispersed to the holder based on her estimated life expectancy.
An annuity is a regularly scheduled payment disbursed over a set period. By annuitizing his IRA, an individual can begin receiving payments from his account prior to the qualifying age, which is 59 1/2. Normally, individuals who withdraw from these accounts prior to the retirement age will face a tax penalty for doing so, but annuitizing an IRA circumvents that penalty.
The process of annuitizing an IRA involves converting an investment into a series of periodic, equal payments based on the account holder’s life expectancy. The balance is divided by the amount of time the Internal Revenue Service expects the account holder to live, which sets a predetermined payment that will remain the same until the value of the IRA is depleted.
Additionally, it’s possible to partially annuitize an IRA, so that regular payments can be made out of one portion while the other portion remains untouched.
Don’t have an IRA yet but want to start saving? Check out these savings account options.
Ellen needs to gain access to her IRA. She decides to annuitize the IRA so she can receive annual payments. The IRA holds $700,000 and she is expected to live for another 20 years. This means she’ll receive $35,000 a year.
It’s not too late to get a tax deduction for your IRA contributions.
Here’s what you should consider when deciding between the two retirement plans.
The SECURE Act and historically low tax rates make a Roth IRA conversion more attractive.
You may take out your Roth IRA contributions at any time without a penalty.
Take control of your IRA now to help get your retirement fund on the right track.
It comes down to whether you prefer a tax break today or in the future.
Rising health care costs are one reason to keep saving and investing.
If you are self-employed, you need to be proactive about retirement savings.
Find out where to go and what to do when it’s time to start drawing down your IRA.