According to many experts the best way to save for your retirement is getting an Individual Retirement Account or IRA. It is a retirement plan that holds your investments and there are rules defining your account that needs to be considered.

There are four types of IRA and many surveys stipulated that the Roth IRA is definitely the preferred choice of many people because of its tax advantages. Roth IRA rules are basically the same with the rules governing the other types of IRA. Altogether they describe the IRA rules as a whole.

Most of the times IRA distribution rules is called IRA withdrawal rules by many retirement planners and oftentimes they used the terms one after the other so don’t get mislead. No matter how they call it doesn’t matter what is important is you understand the rules before you distribute your funds.

Distribution rules for a Roth IRA are very simple and there are two points that you need to remember. First, before you can avail of the so called “qualified distribution” you need to be at least 59½.

Second and the most important point is, your Roth IRA should be at least 5 years old which means you have deposited contributions for 5 taxable years and beyond, definitely a “qualified distribution” is possible. There are also some instances where you can do qualified withdrawal one of which is when you become disabled.

When we say “qualified distribution” it simply means that you can withdraw your funds without being subjected to penalties and fines that can accumulate up to 10% of your total assets.

So if you have $5000 on your Roth IRA account which is the maximum contribution limit for one taxable year meaning from 2010-2011 and 10% of that is $500, imagine that is a very big amount of money only to be paid just for penalty.

Another advantage of having a Roth IRA is that the distribution rules are not subject to MDR or Minimum Distribution Rules.

Remember not everyone can qualify to have a Roth IRA because there are certain guidelines that need to be undertaken and when you do it could be the most effective way of saving for your retirement.

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