Ask Thomas Mitchell: How Does an IRA Distribution Affect My Taxes?
Video Summary
Good afternoon. I’m Tom Mitchell, a partner at the law firm of Waller and Mitchell in New Port Richey, Florida; I wanted to talk to you this afternoon for a minute or two about IRAs. Everybody knows what they are, but very few people know exactly how they work.
Basically, there are two types of IRAs. There is the traditional IRA and the Roth IRA, and there are differences between them. In the traditional IRA, you get to make contributions in to the plan. The money that you put in there accrues interest or dividends and its tax free while it’s in there but when you take the money out, then it’s taxed to you as ordinary income.
On the other hand, with the Roth IRA, when you put the money in, there is no current deduction on your income tax return. The money still grows tax-free while it’s in the account but you get to take it out tax exempt at the end of the time when you retire.
So the next question is who can have an IRA? Basically, anybody who is 70 1/2 and with earned income can establish and contribute to an IRA. When you establish and contribute to an IRA, the account is held by a person called a custodian and they will send you statements every year exactly what the balance of your account is. They also report that to the Internal Revenue Service.
So the next question is then when can I start taking money out? And the first answer is you can take money out at 59 1/2 and that’s awesome. You don’t have to take it out then but you can. And the maximum time that you can delay to take out any money out of your account is 70 1/2. And each year the custodian that I spoke of earlier calculates the balance in your account, divides it by your statistical life expectancy and then they send you a check for that amount.
If you take money out before you’re 59 ½, there’s a penalty. If you take money out after 70 1/2 that’s not sufficient to cover your required annual distribution, there’s also a penalty.
So if you have any questions about your IRA account, be sure to give me a call. This is Tom Mitchell with Waller and Mitchell. My number is (727) 847-2288.
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- Published in Estate Planning, Videos
Taxes Video Index
About Us
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- Does A Living Trust Avoid Estate and Probate Taxes?
- Is Retirement Income Taxable to a Beneficiary?
- Ask Thomas Mitchell: How Do Capital Gains Affect Me?
- Ask Thomas Mitchell: How Does an IRA Distribution Affect My Taxes?
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Introducing…Jaleh Piran – Vesseh!
Video Summary
Hi! I am Jaleh Piran-Vesseh and I am the newest associate at Waller & Mitchell. My primary practice involves real estate litigation, both plaintiff and defense work. I love practicing law because at the end of the day, I love helping people.
If you have a legal question or would like legal advice, please feel free to give us a call at 727-847-2288.
Thank you so much.
What Does it Mean to Record a Satisfaction of Mortgage?
Video Summary
What is the significance of recording a satisfaction of mortgage? Well, the significance is it means you paid the thing off and so that’s just terrific! And so by recording a satisfaction, the lender signs it and you put it in the public record that shows that the mortgage is no longer a lien against your property. Many people talk about taking a name off of a deed or satisfying a mortgage, the way the official record books operate is you put documents in the official record books and you never take them out, and so then you simply file another document to show a change in the chain of title for whenever does a title search.
So by recording a satisfaction of mortgage, it shows in the public records there’s no longer a lien, and they usually state that the debt has been paid in full. Certainly if you do pay your mortgage off, you’ll want to obtain the promissory note and ask that it be paid because it is considered sometimes a negotiable instrument so that’s important to have. But the satisfaction of mortgage indicates that there’s no lien on the property and does indicate that the lender has probably been paid in full. Hopefully you have a satisfaction of mortgage that you need to record, but if you have any questions about it, give me a call at 727-847-2288.
Thank you.
- Published in Real Estate, Videos