The Roth IRA: The Piece To Your Retirement Puzzle?
The popularity of the Roth IRA has brought a myriad of questions about which IRA is best for retirement savings. The answer is, it depends. Yet, for some reason the Roth IRA keeps popping up as the single best retirement account for everyone’s money. It’s simply not true. Yes, it’s a great way to save for retirement. But only for the percentage that meet certain tax conditions. For everyone else it’s just a tax paying vehicle, costing you money.
You see, the government survives on tax revenue. While deferring taxes until retirement is a great idea for you, it has no added benefit for the government today. So the Roth IRA was born and with it, a way to collect taxes now on your retirement savings.
The Roth IRA rules state, we put after tax money in and at retirement we don’t have to pay taxes on withdrawals. We tend to focus too much on the “don’t have to pay taxes” part because it sounds so good. In turn, we’re blind to the fact that taxes are still paid. It’s after tax money going in, at today’s tax rates. But it’s not entirely a bad deal. Under the right circumstances, the Roth IRA a great retirement vehicle. Read more…
2011 IRA Contribution Deadline Just Around The Corner
One of the complications with the tax code is not knowing when the tax year ends. This is certainly true with an IRA contribution. Though 2011 ended months ago, the tax year for some IRAs is just now coming to an end.
The good news out of all this is the IRS gives us some wiggle room to max out our IRAs every year. While you scramble to meet the tax deadline, it’s a good time to look into your IRA contribution too.
IRA Contribution Deadline
This year the 2011 tax deadline falls on April 17, 2012 which also happens to be the IRA contribution deadline. In fact, the contribution deadline always falls on the same day taxes come due. At least that is how it works for traditional and Roth IRAs.
While you are finishing (or starting) your taxes this year, it’s a good idea to look into adding more money to that IRA of yours, if it isn’t maxed out already. The 2011 IRA contribution limit was $5,000 ($6,000 for those over 50 or older). Read more…
2012 IRA Contribution and Deduction Limits
If you’re looking to supplement your retirement nest egg, two of the best options is saving through a traditional IRA or Roth IRA. Which IRA is best for you may come down to the new 2012 IRA contribution and deduction limits released by the IRS.
Though you may not meet the requirements for both IRAs the important thing is to save as early and often as possible for your retirement. If you don’t have an existing IRA to contribute to, the best online brokers will make it easy to open an IRA.
All 2012 IRA contribution and deduction limits will be based on your Modified Adjusted Gross Income or MAGI.
2012 Maximum Contribution Limits
The 2012 Roth IRA and traditional IRA contribution limits did not change from 2011. For both IRAs the maximum amount you’re allowed to contribute is $5,000. You may also be eligible for the additional “catch up contribution” if you’re 50 years old or older by the end of 2012. The “catch up contribution” allows for an additional $1,000 (for a total of $6,000). Read more…
Do You Know Who Your Beneficiary Is?
A beneficiary review is one of those yearly events that can be easily overlooked. When you get a life insurance policy or open an IRA, filling out the beneficiary designation is part of the process. It lets you know where that money goes. But, is that name you filled in years ago, still the person you want as a beneficiary? If not, the wrong person will be getting your money.
I recently got my monthly Roth IRA statement. Part of the email was a simple question that asked “Is your IRA beneficiary up-to-date?”. Good question. I wasn’t really slacking on keeping it updated, since I haven’t had a reason to change it. But, keeping track of it certainly wasn’t a priority.
An IRA isn’t the only account or document that has beneficiary designations. Keeping track of them all can be a bit tedious. So an easy beneficiary review checklist is the place to start. Read more…
Three Costly Roth IRA Conversion Mistakes
Many people took full advantage of a Roth IRA conversion in 2010, thanks to the new no income limit rule and a one time tax payment change. But were those 2010 Roth conversions the best choice for the money? Is there time to go back? What should you be considering for any future Roth IRA conversion?
Certainly there are benefits to a Roth IRA conversion. The two biggest being tax-free retirement income and no minimum distribution requirements. In order to get the benefits of a Roth IRA, there are immediate tax costs. If these benefits don’t outweigh the costs involved, a Roth IRA conversion is wasted money for the wrong person. So, consider these three reasons a Roth IRA conversion is a mistake. Read more…
2010 IRA Contribution Deadline Approaching
The 2010 IRA contribution deadline is fast approaching. With only a few weeks left, you still have time to make your 2010 contributions. If you have done any retirement planning in the past, a traditional or Roth IRA plays a role in achieving your retirement goals.
If you’ve only been contributing $50, $100, or $200 a month, it’s a great start. But you’re not even half way to contributing the maximum amount. It’s the perfect time to make up the difference if have the additional cash to do so. You may even be able to lower your 2010 taxes because of the additional contribution.
Contribution Deadline
Most years you have until April 15 to make all your IRA contributions for the prior tax year. This year, however, the deadline has been extended to April 18, 2011 due to the holiday, Emancipation Day, in Washington D.C. Read more…
Should You Convert Your Traditional IRA to a Roth IRA Before Year End?
The 2010 Roth IRA conversion deadline is approaching quickly. If you haven’t heard, the previous income limit ($100,000) for converting a traditional IRA to a Roth IRA was lifted all the way back in January. With 2011 approaching, it’s always a good idea to check your finances and make any beneficial changes before the new tax year begins.
2010 Roth IRA Conversion Overview
Back in January a new rule allowed for anyone, regardless of income, to convert an existing traditional IRA or old 401(k) to a Roth IRA. Of course it’s not that simple. If you do decide to make the Roth IRA conversion, you have to pay taxes on the converted amount at your current income tax rate. For the 2010 year only, you can choose to make that full tax payment in 2010, or you can choose to split the income tax payment in 2011 and 2012. If you choose to split the tax payment between 2011 and 2012, half will be taxed at your 2011 income tax rate, half at your 2012 income tax rate. Read more…
