IRAs - 10 Things to Know - Penalty Free Withdrawals for Anything

Here are some things you knew and some things you should know about IRA accounts.

1. For single tax payers, your contributions limits to a Roth IRA begin phasing out at incomes of $105,000. For married tax payers, the contribution limits phase out when your income reaches $167,000. These numbers are changing yearly.
2. You may withdraw contributions without penalty at any time for any purpose. Only the earnings will be penalized with a 10% tax if you withdraw them before you are 59 1/2 of age or you do not use the funds for qualified events. Speak to a professional before you make this move as the tax law is always changing.
3. Even if you are not a US citizen, you may open an IRA and claim the Retirement Tax Credit. You must have US earnings and fit the criteria of the credit.
4. You may withdraw all of the contributions and earnings you made penalty free if you have made all the contributions within that tax year.
5. You can use $10,000 of your IRA funds to purchase, build, or rebuild your first home, penalty free.
6. You may use your Roth IRA account as a 529 plan or a savings account for grad school as distributions that you use for qualified education expenses can also be withdrawn tax and penalty free.
7. You can roll your 401(k) over to a Roth IRA when you leave your job.
8. You may have multiple IRA accounts as long as you contribute a maximum of $5,000 per year in all of your accounts.
9. Funds in retirement accounts are not included in your assets to calculate financial aid. If you have limited funds, this is another reason to save for grad school in an IRA and not in a 529 plan, which usually have minimal investment choices.
10. You have until tax day of the next year to contribute to an IRA, therefore, it's not too late to contribute to an IRA for 2010.

Detailed IRS IRA Guide