IRA Basics
What is the maximum annual contribution limit for a Traditional IRA in 2024?
$6,000 (or $7,000 if age 50 or older)
What does IRA stand for?
Individual Retirement Account
At what age do individuals typically start receiving Social Security benefits?
Age 62
Are contributions to a Traditional IRA tax-deductible?
They may be, depending on income and participation in an employer-sponsored retirement plan.
What is the term for the age at which individuals typically aim to retire?
What is the retirement age?
What is the difference between a Traditional IRA and a Roth IRA?
Traditional IRA contributions may be tax-deductible, while Roth IRA contributions are not.
What are the two main types of IRAs?
Traditional IRA and Roth IRA
What is a Required Minimum Distribution (RMD)?
It's the minimum amount individuals must withdraw from their retirement accounts each year starting at age 72 (or 70½ if born before July 1, 1949).
Do contributions to a Traditional IRA reduce taxable income?
Yes
What is a common goal for retirement savings, often expressed as a multiple of one's annual income?
What is a retirement savings target, such as 10x or 15x one's annual income?
What is the age limit for making contributions to a Traditional IRA?
There is no age limit for making contributions to a Traditional IRA, as long as the individual has earned income.
Which type of IRA allows you to contribute money on a tax-deductible basis?
Traditional IRA
What is the penalty for early withdrawal from an IRA before age 59½?
10% penalty in addition to income taxes
What is the age at which individuals are generally required to start taking Required Minimum Distributions (RMDs) from their Traditional IRAs?
Age 72 (or 70½ if born before July 1, 1949)
What are two examples of common retirement goals related to lifestyle?
What are traveling and pursuing hobbies or interests?
At what age can individuals start taking penalty-free withdrawals from their IRAs?
Age 59½
Which type of IRA allows tax-free withdrawals in retirement?
Roth IRA
How do individuals calculate how much they need to save for retirement?
By estimating future expenses, considering inflation, and determining their desired retirement age.
What is the penalty for withdrawing funds from an IRA before the age of 59½?
10% penalty
What is the term for the lifestyle individuals aim to maintain during retirement?
What is the desired standard of living or retirement lifestyle?
What is the deadline for making contributions to an IRA for the previous tax year?
April 15 of the following tax year.
What are two other types of IRAs designed for self-employed individuals and small business owners?
SEP IRA (Simplified Employee Pension IRA) and SIMPLE IRA (Savings Incentive Match Plan for Employees IRA)
What is the term for the minimum amount individuals must withdraw from their retirement accounts each year, typically starting at age 72?
Required Minimum Distribution
How are withdrawals from a Traditional IRA taxed?
Withdrawals are taxed as ordinary income.
What is the term for the financial milestone individuals aim to achieve by the time they retire?
What is financial independence or retirement readiness?