If you are on a plan of setting up an IRA account whether a traditional IRA or a Roth IRA, it is very essential that you know the IRA rules so that you are better guided in setting up an IRA account and in making the corresponding actions like making contributions and money withdrawal.
Before you can set up an account with the IRA, you must first qualify for some set of qualifications. If you qualify to open an IRA account, then that means that you are eligible. The eligibility rule between the traditional IRA and the Roth IRA is not similar. The traditional IRA disqualifies individuals who are already 79 ½ years old and/or above from opening a traditional IRA account. However, those who are 79 ½ years old can still save up money but this time with the Roth IRA. The Roth IRA specifies that there is no age limit for individuals to qualify in opening the account.
When you qualify to open an account with the Roth IRA or the traditional IRA, you then become an IRA account owner and you must then start to make contributions to your account from the income or compensation that you are receiving. The traditional IRA allows its contributors to make deposits of money to their accounts deductible of tax. This means that you are exempted from paying taxes out of your contribution annually. The IRS will not claim a tax out of that amount.
Under the Roth IRA rules, every contribution made by a contributor to his or her Roth IRA account from his or her income or from other compensations, he or she should pay a corresponding tax of it to the IRS. When withdrawals are to be made later, that is the time that the IRS will not claim a tax out of the withdrew amounts.
Having a clear understanding of the IRA rules is indeed very important in dealing with IRA account transactions. Those businesses and proprietors who are planning to open a SEP IRA should likewise understand the SEP IRA rules in order to be guided in making IRA transactions.