Finance Only

How to Pay For Your IRA

Prior to paying money into your IRA, you need to setup an account with a financial institution. This is normally your bank, credit union, mutual fund, stock broker, life insurance company and it can include your employer as well. Like all saving plans you need to identify where the money will be coming from to invest. The traditional IRA applies to anyone under 70.5 years for the tax relief provided by the IRS.

Funding for your IRA account is allowed by the IRS from your wages or salary, commissions, alimony, combat pay and self-employment income. There are some conditions placed on investments into IRA accounts in terms of maximum amounts that will still provide tax concessions. For people aged 50 or more the allowance is $6,000 or 100 percent of earned income, whichever is less. For people aged 60 or more the allowance is $5,000 or 100 percent of earned income, whichever is less. This is an annual contribution and must be made prior to lodging your tax return for that year. › Continue reading

Tags: financial institution, ira account, self employment income