| The basic principle behind Individual Retirement | | | | taxes online, people are used to receiving a refund. A |
| Accounts (IRA) is a deferment of tax liability from | | | | large and premature withdrawal will eliminate this post |
| the time when your tax burden is greatest until after | | | | winter bonanza. |
| retirement when it is the lightest. When you establish | | | | The sad truth about retirement is that a large portion |
| an IRA and make contributions to it, you do not | | | | of the population are saving nothing at all. Most |
| have to pay any tax on those contributions. Once | | | | people are operating their own personal budgets at a |
| you are past retirement age and receive distributions | | | | lost and not setting aside any savings toward |
| from these accounts, you will be in the "over 65" tax | | | | retirement. This creates a constantly growing debt |
| bracket. Even though you will have to pay taxes on | | | | and an early distribution from your retirement fund |
| the distribution at this time, your tax rate will be | | | | becomes a necessity. Proper planning for retirement |
| considerably less. | | | | has become even more essential then ever in this |
| There are some important tax tips involved with | | | | time when employees tend to move from job to job. |
| receiving early distributions from a retirement | | | | In past times when employees were more apt to |
| account. The most important one is do not do it | | | | remain with an employer for many years, pension |
| unless you have no other option open to you. If you | | | | plans would be a good addition to Social Security. |
| take a distribution early, you will be subject to | | | | This is rarely the case today. |
| basically the same tax rate you would have paid | | | | The growing population of retired citizens has |
| originally. In many cases, a person's personal income, | | | | changed the face of retirement in more ways than |
| and thus his tax rate, will be highest in those latter | | | | one. The Active Adult Community has become a |
| years just prior to retirement. This will mean an even | | | | popular way to spend what are supposed to be a |
| higher tax rate than if you had just paid when the | | | | person's golden years. This has created a need for |
| money was first earned. | | | | even more income during the retirement years. An |
| This is not the worst of it either. If you take an early | | | | Active Retirement Community that offers all the |
| distribution prior to reaching the age of 59 and one | | | | amenities most seniors are seeking will demand an |
| half, you are subject to a 10% penalty. It is those | | | | adequate income. It is important to begin planning for |
| years between this magic number and your | | | | retirement as early as possible and to understand the |
| retirement age that you will incur the greatest tax | | | | negative tax implications of dipping into that |
| burden if you receive a large distribution. When tax | | | | retirement account too early. |
| withholding is done properly in this era of paying | | | | |