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IRA

Whats an IRA

IRA stands for Individual Retirement Account

Types of IRAs

There are 3 types of IRAs - Traditional, Roth & Non-deductible

Traditional IRA

Who qualifies

People who don't have 401ks at work or who did not participate or meet other requirements generally qualifies for IRA.

Deadline & Amount

April 15 is the deadline for contributing any where between 0 - 5500.

Benefit

If you do 5500, then 5500 goes out of your taxable income & depending on your tax bracket you will get anywhere between approx. 800 - 1400 additional refund.

When can you withdraw

Its your money. so you can take it out anytime. But theres a 10% penalty for early withdrawal before you reach 59 1/2. Also, it gets added to taxable income in year of withdrawal

When does it make sense to do it

Its a great tool for retirement. Specially for people without 401ks at work. Also, if you are owing taxes to IRS because either enough taxes were not with held in your w2 or for other reasons.

What other factors should i consider

If you don't have any outstanding loans such as credit card debt, student loan, home loan in india where you are paying high interest rate and there are no big expenses coming up in foreseeable future, instead of leaving money in savings account, its better to put it to work in IRA.

How to open it

you can open it with any brokerages like tdameritrade.com etc. online. select traditional ira as account type & correct year

For More Info

google traditional ira. theres plenty of info online

Roth IRA

After tax contributions are made and withdrawals are tax free. This is a good option when you maxed out your 401ks.

Non-deductible IRA

If you don't qualify for Roth IRA because of high income, non-deductible ira is a good option. This can be converted to Roth IRA at a future date.

FBAR

Foreign Income & Deposits Reporting Process

If on any single day during the year value of all your foreign accounts like savings, cds, provident funds, cash value in LIC policies etc. exceeded $10k, then FBAR has to be filed by June 30 in a separate tax filing unless these account values exceed 50k/75k for singles or 100k/150k for married as explained below.

Additional Reporting for High Net worth Accounts

An additional form has to be filed along with your personal tax return if foreign accounts value exceed following threshold by filing status
7 Single or Married Filing Separately
if total value of your specified foreign financial assets is more than $50,000 on last day of tax year or more than $75,000 at any time during tax year
Married
if total value of your specified foreign financial assets is more than $100,000 on last day of tax year or more than 150,000 at any time during tax year

Information required to file FBAR

pls provide this for each account owned
bank/institution name
bank/institution address (including city,state,pin code)
when account was opened
account description (savings/cd/lic/provident fund etc)
account ownership type (single/joint etc)
account owner name/s
foreign currency in which account maintained (rupees etc)
exchange rate used to calculate account value
source of exchange rate used
highest account value during the year
Any custodial accounts (yes/no)