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Spousal IRA Definition

This allows for a more balanced retirement savings strategy within a household.

As a knowledgeable professor in finance, it's important to understand the concept of Spousal IRAs. These unique retirement accounts allow non-working spouses to contribute the full amount to an individual retirement account, as long as their working spouse earns enough to cover the contribution. This money then belongs to the non-working spouse, regardless of the source. This provides an opportunity for a more balanced retirement savings approach within a household. Whether choosing between a traditional or Roth IRA, income caps and contribution limits still apply.

Excess Contribution

An IRA contribution that surpasses the maximum legal limit is considered an excess contribution and is subject to penalty taxes. These taxes are imposed for each year that t...

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Diversification

Diversification in finance refers to the practice of minimizing risk by investing in a variety of industries or companies rather than focusing on a single industry or a smal...

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Age Rule

In order to contribute to a Traditional IRA, it is important to note that an individual must be under the age of 70 ½ for the entire year. This is a crucial rule to keep in ...

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Early Retirement Penalty

other exemption A key concept in the realm of finance is the early distribution penalty, which is a 10% tax that must be paid when withdrawing funds from a retirement plan,...

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