COMMON INVESTMENT TERMS EXPLAINED: Part 7

Back again with some investment terms for ya! A few more retirement and education ideas to consider.

Required Minimum Distribution: In general, holders of traditional IRAs must begin withdrawing money from the account by April 1 of the year after turning 70½. The amount required is a minimum distribution determined by your age and life expectancy. The IRS has tables available to determine the required withdrawal.

• If required withdrawals are not made on time, the IRS will collect an excise tax.

• Roth IRAs aren’t subject to minimum distribution requirements until after the Roth owner dies.

Rollover: Under certain circumstances, when changing jobs, for instance, an investor may transfer funds from one qualified retirement account to another. This may be done without a tax penalty.

Roth IRA: Roth IRAs were first available in 1998. This IRA only allows after-tax contributions, but the earnings aren’t taxed. Provided the guidelines are followed, all distributions are not taxable.

Traditional IRA: Traditional IRAs were first available in 1974. Typically, contributions to a traditional IRA are tax-deductible, provided that certain income thresholds are not exceeded.

Thanks for taking the time to read through another batch of terms! As always, reach out if you have questions or want to chat.