Sentences with phrase «designated qualifying retirement account»
Although funds placed in a designated qualifying retirement account may be accessed at any time in your life, if you take a distribution from a Traditional IRA or a 401 (k) plan before you turn 59 1/2, you'll more than likely face an additional 10 percent early distribution tax, in addition to income taxes on all funds prematurely withdrawn.
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(If you buy a longevity annuity within an IRA, 401 (k) or similar retirement account, you'll want to be sure it's been designated a QLAC, or Qualified Longevity Annuity Contract, and that you limit your investment to the lesser of $ 125,000 or 25 % of your account value.)
If you decide to go with a longevity annuity and plan to buy it within a 401 (k), IRA or similar retirement account, make sure you go with one that meets the new Treasury Dept. regulations and has been designated a QLAC, or Qualified Longevity Annuity Contract.
By contrast, contributions to a Roth IRA or a designated Roth account in an employer retirement plan do not reduce current income, but qualified withdrawals — including any earnings — are generally free of federal income tax as long as they meet certain conditions.