Rules for Contributing to an IRA

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When contributing to an IRA, remember that the IRS issues the maximum amount that an individual can place into their IRA every year. Find out why money in an IRA must be left alone in a tax-deferred status for a certain length of time with help from a registered financial consultant in this free video on money management and financial advice.

Part of the Video Series: Money Management
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Video Transcript

This is financial adviser, Patrick Munro, talking about rules for contributing to an IRA. An IRA, of course, is referred to as a Individual Retirement Account. And every American that has a job and an employer-sponsored program is authorized by the IRS to place money, within a range and a limitation, into their IRA. And there are rules for contributing that. Every year the IRS issues the maximum amount that an individual can place into their IRA. If you have a progressive employer, they will match your contribution for the same amount that you have payroll deducted, and that will help your savings grow even more. The basic rules that are involved is you must leave the money alone in a tax deferred status until fifty nine and a half, otherwise you'll face a penalty for early withdrawal. In these recessionary times, many individuals are tapping their 401Ks to meet household obligations in wake of layoffs, etcetera, and this is not the way to go because there are government penalties, state and federal taxes to paid that will really affect your returns. Be aware of the rules on your IRA, and you, too, will have a successful financial future. This is Patrick Munro, financial adviser.

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