Saving for retirement is a long-term journey, and an IRA (Individual Retirement Account) is one of the best tools to help you get there. But what happens to your IRA once you retire? Do you have to withdraw all your money at once? Are there taxes involved? Can you keep growing your savings?

1. You Don’t Have to Withdraw Immediately

   Your IRA can keep growing even after retirement. However, Traditional IRAs require Required Minimum Distributions (RMDs) at age 73, while Roth IRAs have no RMDs, allowing your money to grow tax-free indefinitely.

2. Taxes on Withdrawals Depend on Your IRA Type

               •          Traditional IRA: Withdrawals are taxed as ordinary income.

               •          Roth IRA: Withdrawals are tax-free if you’re 59 ½ and have met the 5-year holding period.

3. You may be able to contribute to your Traditional or Roth IRAs after retirement
   •       For 2024, the total contributions you can make for the year, to all your IRAs, can’t be more than $7,000 ($8,000 if you’re age 50 or older), or
   • If less, your taxable compensation for the year.

     You Can Choose Your Withdrawal Strategy

     Common approaches include:

                 •          The 4% Rule – Withdrawing 4% annually for sustainable income.

                 •          Fixed Amount Withdrawals – Taking out a set sum monthly.

4.  Your IRA Can Be Passed to Beneficiaries

The IRA can be passed to a beneficiary, after the death of the account owner and they may be subject to Required Minimum Distribution (RMD) rules. The IRA owner must designate the beneficiary under the procedures established by the plan. The beneficiary has different distribution options based on if the IRA is going to a spousal beneficiary or non-spouse beneficiary.

Your IRA remains a vital financial tool in retirement, whether you withdraw, continue growing it, or pass it on. Smart planning ensures your savings last!

*As always, refer to your tax advisor on which IRA may be best based on your situation. These articles are for general information purposes only and are not intended to provide legal, tax, accounting or financial advice. Eureka Savings Bank urges its customers to do independent research and to consult with financial and legal professionals before making any financial decisions.