In this episode we talk about the recent changes to the rules for IRA’s… What you need to know and what it means for you….(read more)

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New IRA Rules That You Need to Know | Road to Retirement Podcast | Ep. 106

retirement planning is a crucial aspect of everyone’s financial journey. As we strive to secure our financial future after retirement, one of the most popular options available to us is an Individual retirement account (IRA). IRAs offer various tax advantages and investment opportunities that can help grow our retirement savings.

However, IRA rules can be complex, and it’s important to stay up to date with any changes or new regulations. In this episode of the Road to Retirement Podcast, we will dive into some of the new IRA rules that you need to know.

1. Increased Contribution Limits:
The Internal Revenue Service (IRS) regularly adjusts contribution limits to reflect inflation and economic conditions. For the tax year 2021, the IRA contribution limit has been increased to $6,000 for individuals under 50 years of age. Those who are 50 or older can contribute an additional $1,000 as a catch-up contribution, bringing their total limit to $7,000. It’s crucial to take advantage of these increased limits to maximize your retirement savings.

2. The Age Limit for Traditional IRA Contributions is Removed:
Previously, individuals could not contribute to a traditional IRA once they turned 70 ½ years old, regardless of their employment status. However, as per the SECURE Act (Setting Every Community Up for Retirement Enhancement), the age limit for traditional IRA contributions has been removed, allowing people to continue contributing to their retirement savings as long as they have earned income.

3. Required Minimum Distributions (RMDs) Age Increased:
Under the SECURE Act, the age for required minimum distributions (RMDs) from traditional IRAs has been increased from 70 ½ to 72 years old. This change gives individuals the flexibility to delay taking RMDs and potentially allow for more tax-efficient savings growth.

4. New Rules for Inherited IRAs:
For beneficiaries inheriting IRAs in 2022 or later, new rules apply. Non-spouse beneficiaries no longer have the option to take distributions over their lifetime. Instead, they must withdraw the entire amount within ten years. However, exceptions apply to certain eligible beneficiaries, such as surviving spouses, minor children, and disabled individuals.

5. Qualified Charitable Distributions (QCD) at 70 ½:
While the age for RMDs has increased, individuals who are 70 ½ or older can still make qualified charitable distributions (QCDs) from their IRAs directly to eligible charitable organizations. These QCDs count towards a person’s RMDs and have tax advantages as they are excluded from taxable income.

6. Penalty-Free Withdrawals for Birth or Adoption Expenses:
The SECURE Act also allows penalty-free withdrawals of up to $5,000 from an IRA to cover birth or adoption expenses. This change aims to support families during these important milestones without incurring early withdrawal penalties.

It’s crucial to understand these new IRA rules to make informed decisions about your retirement savings. Consult with a financial advisor or tax professional to explore how these rules impact your individual situation.

Tune in to episode 106 of the Road to Retirement Podcast to learn more about these new IRA rules and how to navigate your way towards a secure retirement. Remember, the more informed you are about retirement savings, the better prepared you will be for the future!