Ira Distribution Rules

IRA accounts are used as instruments for retirement savings. Although There are 4 different types of IRA's the basic IRA distribution rules are different for only one of the four. Three of the four have mandatory distribution rules while the one has none.

Traditional, SEP (Simplified Employee Pension plan) and Simple IRA's all have a minimum IRA required distributions. While these plans have great up-front benefits such as tax-deferred contributions, all of the must have a minimum withdrawal at age 70 and 1/2 and every year thereafter.

Many people believe the tax-free deductions far outweigh the fact that they must start withdrawing at 70. This is simply because at 70 the individual most times will be in a lower tax bracket.

Roth IRA's are a new and different breed of IRA. Contributions to a Roth IRA are not tax deferred but the interest earned on a Roth IRA is not taxable. This alone makes a Roth IRA very attractive.

Roth IRA's unlike the traditional IRA's have no minimum required withdrawal rules at any age. Also, unlike a traditional IRA, contributions can be made to the account virtually indefinitely.

While minimum required distributions may be a detractor from the Traditional IRA, the tax benefits are something to be considered when opening an IRA account. If you don't mind paying taxes now in trade for tax free interest and no minimum required withdrawal, the Roth Ira may be the way to go.