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Roth IRA Penalty for Early Distributions – Paul Gaulkin CPA

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In the event a premature distribution is made from a Roth IRA to a taxpayer, the distribution will be subject to a 10 percent penalty of the amount that must be reported as a taxable distribution. Explaining the Penalty If an individual had contributed $10,000 to a Roth IRA and the value of the account was $15,000, the difference between the two ($5,000) would be considered earnings. If the individual chose to withdraw all of the Roth IRA funds and … Read more

IRA Contribution Limits – Paul Gaulkin CPA

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IRA contribution limits are important to understand because if a taxpayer were to over contribute, they would be subject to additional tax that would normally not apply. General IRA Contribution Limits For 2012m the maximum contribution to a traditional IRA is the smaller of the following two amounts: 1. $5,000 ($6,000 if taxpayer is 50 years or older) 2. 100% of taxable compensation during the current year Remember that taxable compensation is very specific and it is important to know … Read more

Traditional IRA Introduction – Paul Gaulkin CPA

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An Individual retirement arrangement is an account with certain tax advantages given by the IRS to encourage taxpayers to save for retirement. The main advantage of an IRA is the ability to contribute pretax income, up to a specified annual limit, that can grow tax deferred until it is withdrawn at a later date. Traditional IRA Specifics An individual retirement account is a trust or custodial account organized in the United States for the exclusive benefit of a taxpayer or … Read more