11 Things You May Not Know About Your IRA
The most important part of your individual retirement account (IRA) is the fact that it is "individual". You can customize when you make deposits, take withdrawals and pay taxes on distributions. You can even control what happens to it after you die. Want to take advantage of all that your IRA has to offer? Read on for some little-known features that will help you get the most out of your contributions.
1. You can contribute to more than one IRA.
It is possible to end up with more than one IRA for a number of reasons. For example:
· You had an existing Roth account and then rolled an old 401(k) into a Traditional IRA.
· Your adjusted gross income (AGI) rose to the point where you were no longer eligible to contribute to your Roth IRA, so you opened a Traditional IRA.
· You inherited an IRA from a loved one, but you already had one of your own.
· You maintained your Roth account and opened a Traditional IRA to take advantage of tax deductions.
Contribute to as many IRAs as you want, but the total deposited in all IRAs is limited to the annual maximum amount. For example, the annual maximum contribution for 2008 is $5,000. So, if Bob deposits $2,000 into his Traditional IRA, he can also contribute $3,000 to his Roth account during the same year.
It is possible to end up with more than one IRA for a number of reasons. For example:
· You had an existing Roth account and then rolled an old 401(k) into a Traditional IRA.
· Your adjusted gross income (AGI) rose to the point where you were no longer eligible to contribute to your Roth IRA, so you opened a Traditional IRA.
· You inherited an IRA from a loved one, but you already had one of your own.
· You maintained your Roth account and opened a Traditional IRA to take advantage of tax deductions.
Contribute to as many IRAs as you want, but the total deposited in all IRAs is limited to the annual maximum amount. For example, the annual maximum contribution for 2008 is $5,000. So, if Bob deposits $2,000 into his Traditional IRA, he can also contribute $3,000 to his Roth account during the same year.
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