Reducing Your Taxes on IRA Withdrawals

Reducing Your Taxes on IRA WithdrawalsDon’t get taxed for withdrawing from your IRA

Uncle Sam’s eyes are something that cannot be covered. Like Santa, he sees all activity that happen at any time throughout the day. Skipping out on your IRA withdrawals can land you in prison, but there are legal ways in which you could erase, or at least minimize, the taxes on your IRA withdrawals. Learn how to evade taxes on your IRA withdrawal without going on the FBI’s Most Wanted list.

  1. Roth IRA

Opening and funding a Roth IRA is a great way to avoid some taxes on your withdrawal. Once you turn 59.5 years-old, you can withdraw from this account completely tax-free — as long as you’ve had the account for at least five years.

  1. Use an exemption

Using your Roth IRA, you can withdraw up to $10,000 to buy, build, your rebuild your first home. The IRS considers your home a “first home” if you did not own a home two years prior to purchasing this one. You may always use your withdrawals by funding your education. Although, this will only exempt you from the 10 percent early withdrawal fee.

  1. Traditional IRA

If instead you choose to go with a traditional IRA, the IRS allows you to keep that money as long as you want. If you should so choose, you can leave it in there until you pass away. However, after you turn 71.5 years of age, you’ll be forced to pay a tax on the money you were supposed to  withdraw but didn’t.

The IRA and IRS can seem to be out for your money. But, with a little knowledge regarding the subject, you’ll be able to navigate through ease! If you require any information about how your Texas insurance policy protects you and your loved ones, contact VGW Walker Insurance.