Video: IRA Distributions

In this lesson, Nick Palazzolo, CPA, demystifies the complexities of Individual Retirement Accounts (IRAs) by exploring the various types, such as Traditional Deductible IRAs, Roth IRAs, and Traditional Non-Deductible IRAs, while focusing on the rules for distributions. Through engaging examples, he explains the tax implications and strategic considerations for contributions and withdrawals, including the treatment of pre-tax and after-tax dollars, required minimum distributions, and penalties for early withdrawals. Nick also shares insights into how understanding these accounts can be beneficial not only for the exam but also for personal financial planning. Whether it's preparing for a simulation involving a full individual return or just planning for the future, the breadth of knowledge provided in this lesson is invaluable for apprehending the retirement planning segment of the CPA exam and beyond.

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Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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IRAs. Independent or individual retirement accounts. Let's see what we got here. Now, think 401ks, think retirement, all that good stuff. We've got three types we're going to go through here. Now, generally, what would you see in your world? I mean, at least for me, I'm pretty much seeing traditional deductible IRA and Roth IRA. However, this is another option. We'll talk about it, treat it as if it is equal here. Contributions to a traditional deductible IRA are made with pre-tax dollars and are deductible on the taxpayer's income tax return. Before I even dive into this, I'll make it a little more clear. Your regular IRA is essentially the same thing as a 401k, except you do it by yourself. It's not sponsored by an employer, so it's the same thing. If any of you have contributed to your 401ks, to which I say, great. I hope it works out. I hope you get to retire early. Maybe throw some my way if that would not harm you too much. This is the same thing here. It comes out of your paycheck and you don't get taxed on that money. However, when you have to retire or when you do retire, that money will be taxed. It's considered ordinary income. Now, how do you remember the difference between IRA and Roth IRA? Well, I think of Roth IRA where that is after-tax dollars, as we see here. I'm jumping on the slide. I know. I know I'm going out of order. I'm the absolute worst. This is after-tax dollars. Let's say you get paid. You take your money. You throw it in your Fidelity Roth IRA. Then when you're 59 and a half, or we'll talk about that in a second, when you're at retirement age, you're

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Federal Taxation of Individuals: Filing Status, Gross Income, & Adjustments

Module: 3 Concepts, 54 Videos

Filing Status Overview

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Introduction to Filing Status

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Tax Filing Options

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Married Filing Separately vs. Filing Jointly