You know the stats: 10,000 boomers reach retirement age each and every day. It's the topic that's on everyone's mind, it seems, and tax season can raise additional questions.
How are earnings on an IRA taxed? What is the penalty for making excessive contributions to an IRA? How are amounts distributed from a traditional IRA taxed? If your clients come to you with these and other questions, we have the answers.
1. When are funds in an IRA taxed?
Funds accumulated in a traditional IRA generally are not taxable until they actually are distributed. Funds accumulated in a Roth IRA may or may not be taxable on actual distribution. Special rules may treat funds accumulated in an IRA as a "deemed distribution" and, thus, includable in income.
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