by Tracy Wayne Mitchell
An Individual Retirement Arrangement also known as an IRA is a tax qualified account. This means that the values inside the account grow tax-deferred. As long as the money stays in the account the owner will not have a tax liability. When distributions are taken, the amount is added to the owner’s income in the year they receive it. It is taxed at ordinary income tax rates. In most cases a distribution cannot be made prior to 59-1/2 without incurring a 10% pre-mature distribution penalty. The year following the year the owner turns age 70-1/2 they will be subject to RMD (required minimum distribution). The RMD is due to be taken by December 31st every year thereafter.
Many IRAs are established by individuals who transfer the value of an employer sponsored plan such as a 401k, 403b, TSP or 457b. There are many advantages to holding the funds in an IRA instead of leaving them in the employer plan.
An IRA is not an investment! it is a “type” of money, tax qualified money. This is why IRAs are categorized as “qualified” funds. The IRA must be invested somewhere. This is the most common misunderstanding I run into when counseling with someone concerning these types of accounts. Many times when I ask them where their IRA is invested they get a puzzled look on their face and say something like: What do you mean? It’s an IRA, that’s all I know. Not a good answer! You need to know where your IRA is invested. Is it safe? Is it at risk? Are you paying fees?
There are three primary categories of investments that IRAs can be invested in:
Bank CD/MMA, Stocks/Bonds/Mutual Funds and Insurance products.
You can invest in one or any combinations of these options. To determine which one or combination is best for you usually starts with an adviser. You will need to assess your risk tolerance, time horizon and long-term goals to make the best decision.
About tracymitchell7tm4606
Tracy Wayne Mitchell was born in 1960 in Miami, Oklahoma and is on the Tribal Roll of the Citizen Band Potawatomi Tribe of Oklahoma. He has resided in Springfield, Missouri since 1961. He has been licensed by the State of Missouri Department of Insurance since 1995 to advise consumers on Annuity/Life and Health insurance products. Tracy was honored by American Equity Investment Life Insurance Company’s President Kevin Wingert with the “Seal of Excellence Award” for outstanding achievement. National Western Life presented Tracy with the “2014 Champion’s Club Award” at their world conference held in London, England for top performance and again in 2016 held in Puerto Rico.
Tracy Wayne Mitchell has lectured and trained numerous loan officers throughout the four state area. Additionally, he has conducted a continuing education finance class held at the Lifetime Learning Center in Springfield, MO.
Tracy Wayne Mitchell is owner of Mitchell & Associates Financial, LLC and its subsidiary Federal Employee Benefit Advisors LLC. He has a passion for helping retirees and those about to retire, plan for a successful retirement. He also helps veterans and federal employees better understand their benefits while providing guidance and solutions.
Tracy’s articles on estate planning and retirement investing have been published in
Boomer The Magazine. Tracy wrote a foreword to the book “Maximizing Your Federal Benefits” and has developed a specialty in helping federal employees better understand their benefits and make sure they are on the right track. Tracy authored his own book
”THE INFORMED FED” A Survival Guide to Federal Employee Benefits that was released in 2013 through Tandem House Publishers. The book is available for purchase at Amazon.com. You can tune into his financial radio show every Wednesday at 2 pm on Springfield Missouri’s KWTO AM 560 or stream it live at newstalk560.com. His free newsletter is available by contacting him at: 417-429-0331
Tracy Wayne Mitchell enjoys bass fishing in his time off and lives with Joy his wife of 30 years. They are members of James River Church in Ozark, MO and actively support Christian mission efforts worldwide. They have three children: Laramie Pence: Currently pursuing her Doctorate at the University of Maryland, Cooper: Investment Adviser with Dane
Financial and Connor: Sophomore at OTC in Springfield, MO
Tracy Wayne Mitchell Author of THE INFORMED FED 