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An IRA Inside & Out

Note: My attempt to disclose to investors the hazzards of an IRA ownership for many was not posted because of a Seeking Alpha editor who sided with an author who complained that an earlier post went against his biases point of view. I sincerely believe EVERY investor has a right to understand the other side of the IRA story.

IRA's are not what everyone thinks they are. The idea that everyone should max out on their IRA contributions each year or even open one is a very taxing dilemma.

Make no mistake, this government hand out has one goal -- to get your tax dollars -- as soon as. Let's expand on that.

The idea that an IRA will shelter your contributed dollars from taxes is true, but true only when continuing your sheltering those dollars within said IRA.

Once one is 70 1/2 he must take out what is referred to as the RMD (Required Minimum Distribution) for that year. The IRS makes this as difficult to understand as possible. Understand that the IRA holder has until April 1 of the following year to do this first RMD. Also understand that should one wait until the following year he will also be required to take out the RMD for that year also. Many mistakes are made on this -- the IRS just loves slip ups like this -- you will pay extra!

Also understand that this is for an IRA. If you have a 403(b) either as a beneficiary or as the owner you will have to do a seperate RMD for this account -- using the appropriate IRS (dictated) table. You may be surprised that your first year having to do this RMD means taking far more funds out as compared to the other table(s). Do NOT mess up on this. Also be advised that the custodian who handles this account for you may not understand the IRS instructions on RMDs regarding the 403(b).

That's as far as I go with this. Anyone wanting my full accord on the ramifications of any IRA should exprees that interest and I'll oblige.

Additional disclosure: None