Can You Put Money Into an IRA Yourself Just Like a Savings Account?
An Individual Retirement Account is an qualified retirement savings plan but does not function like a regular, non-qualified bank savings plan. The Internal Revenue Service regulates how money goes in and comes out of the account. Even though it does not function like a regular bank savings account, you can actually own a bank IRA savings account as long as you follow the regulations.
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IRA Regulations
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The 2011 IRA regulations state that an investor can contribute up to $5,000 each year into the IRA. An investor over the age of 50 is allowed to add $1,000 more, making a $6,000 annual contribution. Traditional IRAs get a tax deduction for contributions but add all distributions to income. Roth IRAs have no deduction but grow tax-free. In order to take money out of the IRA without a 10 percent IRS penalty, the IRA owner must be at least 59 1/2 years old.
IRA Savings
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The IRS allows many types of investment options for IRA investors, one being bank investments. As a result, a conservative investors can place IRA assets with a bank custodian and hold those assets in a savings account. The savings IRA is liquid with no penalties to access money. This is a good option for investors who are already 59 1/2 seeking to preserve capital assets and have high liquidity with retirement money.
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Savings and Insurance
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An IRA held at a bank custodian offers investors the protection of Federal Deposit Insurance Corporation insurance. The FDIC insures assets up to $250,000 per tax identification number. An IRA owner has both his non-IRA and IRA funds insured for $250,000 each for a total of $500,000 maximum coverage. This insurance exists in the event the bank becomes insolvent. Brokerage investments don't hold this insurance guarantee.
Considerations
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An IRA is a retirement savings program. You will never be able to make contributions to it like you would a regular savings account. However, if you meet the IRS age threshold, you can take advantage of the IRA savings account like you would a regular savings account. There is no penalty for pulling money out. Don't forget to pay the taxes on the distribution if you take money out. A regular savings account pays taxes on the interest annually where the money in the savings continues to grow deferred if it is in an IRA.
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