Tax Treatment of Individual Retirement Arrangements

Course Description:
Employee Retirement Income Security Act created an individual retirement arrangement—usually referred to simply as an IRA—to encourage taxpayers who were not participants in an employer-sponsored qualified retirement plan to save money to fund their future retirement needs. In order to participate, you needed to be employed and not a participant in a pension, profit-sharing or other qualified plan.

These early ERISA provisions offering tax benefits to individuals funding IRAs have been extended in subsequent legislative actions to:

  • unemployed spouses
  • qualified retirement plan participants
  • taxpayers preferring tax-free distributions instead of deductible contributions

Since that earlier ERISA expansion related to IRAs, new IRAs have been added, including Roth IRAs that offer tax-free qualified distributions rather than deductible contributions. In order to differentiate the newer Roth IRA from its earlier cousin, the original IRA is now referred to as a “traditional” IRA.

Learning Objectives:
Upon conclusion of this course, students will be able to:

  • apply the rules governing eligibility for and contributions to traditional and Roth IRAs
  • identify the requirements and benefits related to a spousal IRA
  • apply the tax treatment rules concerning contributions to and distributions from traditional and Roth IRAs
  • distinguish between traditional and Roth IRA distribution rules

Tax Year: 2019
Prerequisites:  None

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