Money
Play by the rules with your retirement accounts and you can accumulate a lot of money.

Saving for retirement can seem a daunting and confusing affair, and if you don't know anything about IRAs, you might assume that they're daunting and confusing, too. The basic rules for IRAs aren't so complicated, though. Read on for the IRA rules you need to know.

What are the tax benefits of IRAs?
There are two main kinds of IRAs: the traditional and the Roth. With a traditional IRA, you contribute money on a pretax basis. The value of your contributions is subtracted from your taxable income, so it reduces the tax you pay now. (For example, if your taxable income is $50,000 and you contribute $5,000, your taxable income falls to $45,000, shielding $5,000 from tax in your contribution year.) The money grows tax-deferred until you withdraw it in retirement, when it's taxed as ordinary income. Your tax break is an upfront one.

The Roth IRA offers no upfront tax break, accepting only post-tax contributions. With a taxable income of $50,000 and a Roth IRA contribution of $5,000, your taxable income will still be $50,000. But if you follow the rules, it's withdrawn in retirement completely tax-free.

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Breaking some rules has dire consequences. Breaking IRA rules will just cost you financially. Photo: Steve Jurvetson, Flickr

How much can you put into your IRA?
The IRA contribution limits for both Roth and traditional IRAs are the same. For the 2015 tax year, the limit is $5,500 -- plus an extra $1,000 "catch-up" contribution for those aged 50 or older.

Per the rules, you can have multiple IRAs, all Roth, all traditional, or a mix, and can contribute to all of them each year -- as long as you stay within the $5,500 or $6,500 limit in total. In other words, you can spread that contribution across more than one IRA if you want to.

What are the IRA deadlines?
Contributions to IRAs for a given tax year are due by the tax-filing deadline for that tax year, which is usually April 15. So for tax year 2015, the IRA contribution deadline is April 15, 2016. (Be sure to specify which year the contribution is for on your check!)

How do you set up an IRA account?
It's easy to set up an IRA account. Many financial institutions would love to help you open one up with them. Visit any major brokerage's website, for example, and you can access account-opening information and forms that you can fill out online or print and mail in.

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Image: Dan Brady, Flickr

What can you invest in, in your IRA?
While 401(k)s typically limit you to a selection of investment offerings, such as some stock and bond funds, IRA money can be invested in a much wider range of investments, such as stocks, bonds, ETFs, mutual funds, gold coins, bars of silver, and CDs. You can even invest in real estate or buy a business or a stake in a business through your IRA, though there are a bunch of additional rules surrounding those investments. IRA rules forbid investing in insurance or collectibles.

When can you withdraw funds?
You're generally fine withdrawing money once you reach the age of 59 1/2. Traditional IRAs (but not their Roth counterparts) impose required minimum withdrawals (RMDs) beginning at age 70 1/2.

If you want your money before age 59 1/2, a traditional IRA will charge you a 10% penalty on what you withdraw (plus, you'll owe taxes on it, as you will with regular withdrawals). Roth IRAs permit early withdrawals, but only of the money you contributed to the account, not the earnings on it that have likely accumulated in the account or funds converted into the Roth from a traditional IRA.

Withdrawals after age 59 1/2 from a Roth IRA can be freely made as long as you first contributed to the account at least five years ago. Also, any money converted from a traditional IRA to a Roth must remain in the Roth for at least five years to qualify for penalty-free withdrawals.

That's pretty much it, for the basic IRA rules you need to know. Armed with this information, go open an IRA account or make sure you're making the most of the one(s) you have. You'll be happy you did, come retirement.

Longtime Fool specialist Selena Maranjian, whom you can follow on Twitter, has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.