Nine need-to-know facts about IRAs

As the April 15 deadline for filing 2014 tax returns approaches, now is a good time to consider where you are — and where you want to go — financially. Knowledgeable investors of all ages should consider looking into Individual Retirement Arrangements (IRAs). Whether you’re approaching retirement or just starting your first real job, here are nine facts about IRAs to help you understand what they are and what they have to offer.

1. There are two kinds of IRAs; Roth and traditional, and they each have tax benefits. Which IRA you can put money into depends on your income level.*
2. To contribute to an IRA, you must earn income — wages, salary, tips, or commissions. But if your spouse doesn’t earn an income, he or she can also contribute to an IRA as long as you’re married and file jointly.*
3. Anyone who earns reportable income can contribute to a Roth IRA, no matter their age.* That means children can start saving for retirement as soon as they get their first part-time job.
4. Naming your IRA beneficiary is very important so don’t miss this step when completing your IRA paperwork. One of the benefits of owning a IRA is the ability to transfer funds directly to beneficiaries without going through probate.
5. For plan years 2014 and 2015, an individual can contribute a maximum of $5,500 split between any number and any combination of Roth and traditional IRAs. If you’re age 50 or older, you can make an additional $1,000 catch-up contribution.*
6. Traditional IRAs require minimum distributions starting at age 70½ . You can leave money in your Roth IRA until you need it.*
7. Form 5498 is the document that confirms the amount you contributed to your IRA. Your IRA trustee or issuer — not you — is required to file this form with the IRS by May 31. You do not file it with your tax return. The copy you receive in the mail is a copy for your records.
8. You cannot borrow from your IRA. Be careful if you’re rolling over funds from one account to another — if you take money out you have to put it back in 60 days or less.*
9. In general, withdrawals from both Roth and traditional IRAs before age 59½ may be subject to a 10% tax penalty. There are exceptions.*

Farmers Life offers annuities that may be one place for your IRA rollover, inheritance and other lump sum distributions, and can accept additional contributions. Let’s talk about how a Farmers annuity might supplement your retirement portfolio. Because the more you know, the better you can plan for what’s ahead.

*See Individual Retirement Arrangements (IRAs), Publication 590-A Contributions to Individual Retirement Arrangements and Publication 590-B Distributions from Individual Retirement Arrangements.

For informational purposes only. Neither Farmers New World Life Insurance Company, its employees nor its Agents provide legal or tax advice. Always consult your own attorney, accountant or tax adviser as to the legal, financial or tax consequences and advice on any particular transaction.

Your Farmers agent may only sell policies in states in which he or she is licensed.

Farmers New World Life Insurance Company is not licensed to sell life insurance, accident and health insurance, or annuities in the state of New York.

Annuities issued by Farmers New World Life Insurance Company, 3003 77th Ave. SE, Mercer Island, WA 98040.