IRA Contribution Calculator

Individual Retirement Accounts (IRAs) are a great way to supplement employer-sponsored retirement accounts or for self-employed persons who are responsible for their retirement planning.

"Choosing the right retirement account can be complicated—but it doesn't necessarily have to be. Our IRA Contribution Calculator will take you through what you need to know to make an informed decision. Input your information below and see how much you can contribute to a Traditional, Roth, and SEP IRA account this year."

Learn about the various IRA accounts for the employed or self-employed and find out how much you can contribute this year at: https://www.sofi.com/roth-ira-calculator/

 

A condensed crash course in estate planning with implications for inherited IRAs

 Wow, that's a long title for a blog post but the link below to Inheritance and IRAs is a good refresher/reminder on tasks to complete...soon, maybe before the fast approaching end of the year.

• The importance of having a will
• The tax implications of inheritance for spouses and other beneficiaries
• The different scenarios that can occur in inheritance planning
• The rights spouses and beneficiaries have in the process
• Extenuating circumstances that could change the outcome of an inheritance
• How inheritance works for different types of assets outside of an IRA

https://www.birchgold.com/inheritance-and-iras/

Now may be ideal time to convert a trditional IRA to a Roth

Investment losses in this unprecedented market decline have been brutal. But keep in mind that if you've been invested during the almost 11 year long bull market you may still be ahead.
To survive this coronavirus bear market consider converting part or all of a traditional IRA to a Roth IRA. Any amount that you convert will increase your taxable income for 2020 but the market decline and possible job loss or income decline may have reduced what you expected to earn this year. The benefit is that you will pay taxes now on a much reduced value of your traditional IRA and the Roth IRA will NOT be taxable when you withdraw funds in retirement.

Due to the 2017 income tax cuts many people will pay lower taxes this year than in the future after they retire.
Asset values are greatly reduced from the peak in mid-February 2020.
Income tax rates are scheduled to increase in 2026 when the 2017 tax cuts expire. Remember? A sunset provision was written into the 2017 tax law.
So now is a good time to consider a Roth conversion.
A few reminders: once you hit age 59 1/2 and have held the Roth for at least 5 years, future withdrawals are tax-free and penalty-free. Plus you won't have to take required minimum distributions (RMDs) from a Roth IRA account in retirement.
Roth withdrawals in retirement can be used to reduce the portion of Social Security payments that are subject to income taxes and avoid Medicare premium surcharges (on individual incomes above $87,000 and joint incomes above $174,000).

Ideally you should have money from outside the IRA to pay the additional tax on the conversion. Ideally you should convert only enough from a traditional IRA to make full use of your current income tax bracket. You don't want to convert so much that you are pushed into the next highest tax bracket at the margin.

For retirees, the best time to convert to a Roth is before claiming Social Security and taking RMDs (which start at age 72 for taxpayers born July 1, 1949 and later).
You may want to do the conversions over a period of years to avoid a higher tax break.
By reducing RMDs from traditional IRAs, retirees with after-tax incomes of $40-$90k may also eliminate or reduce taxes on their Social Security benefits. Up to 85% of Social Security may be subject to income tax.

Consult your tax adviser to help minimize taxes while converting a traditional to a Roth IRA.

Retirement Preparation 101 video

Check out this 17 minute video, courtesy of the Squared Away Blog:

https://squaredawayblog.bc.edu/squared-away/video-retirement-prep-101/

Kevin Bracker, a finance professor at Pittsburg State University in Kansas, presents a solid retirement strategy to workers who need to get smart about saving and investing.
Bracker explains the most important concepts clearly – why starting to save early is important, why index funds are often better than actively managed investments, the difference between Roth and traditional IRAs, etc.

Mom doesn't need flowers or a new kitchen gadget for Mother's Day!

Mom needs an Individual Retirement Account (IRA)!
Whether employed or not, as long as a spouse is earning income, Mom can open an IRA to help provide financial security/financial freedom in later life. Typically one must have earned income to fund an IRA but not if a spouse has earnings.
Typically dad is accumulating credits toward Social Security retirement benefits and may have access to an employer sponsored retirement account through his work but many moms, whether employed or not, are building very little in the way of financial security for later life. Sure they may be eligible for Social Security retirement equal to half of their spouse's benefit but that's not much.
So show mom you are financially savvy and get dad to help open and contribute to a Roth IRA for mom.
Lot of info on IRAs on this blog; use the search function for details.

Individual Retirement Account Update

The amount you can invest in an IRA is increased for 2019. You can still contribute for 2018 before you file your income tax return. 
Quoted from the IRS website: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits

For 2019, your total contributions to all of your traditional and Roth IRAs cannot be more than:

• $6,000 ($7,000 if you’re age 50 or older), or
• your taxable compensation for the year, if your compensation was less than this dollar limit.

For 2015, 2016, 2017 and 2018, your total contributions to all of your traditional and Roth IRAs cannot be more than:

• $5,500 ($6,500 if you’re age 50 or older), or
• your taxable compensation for the year, if your compensation was less than this dollar limit.

The IRA contribution limit does not apply to:

• Rollover contributions
• Qualified reservist repayments

The Huge Retirement Penalty for Being a Mom

To reinforce my earlier post about giving mom an Individual Retirement Account rather than flowers or brunch for Mother's Day read on...
"As Mother’s Day approaches, families are busy buying flowers or booking a brunch at a favorite restaurant. Sounds great, but you may want to check on Mom’s retirement plan."
1. Moms generally earn less… 
2. …so they save less for retirement…
3. …and receive lower Social Security benefits.
4. Yet they have longer retirements to finance…
5. …which adds up to higher odds of poverty in retirement.    
Read the details by Penelope Wang at: http://time.com/money/4318170/retirement-penalty-mother/
Then search for "IRAs" on this blog for how to arrange an individual retirement account for mom. Adult children might want to contemplate the impact on their lives when mom is old and living on only Social Security.

IRA Rollover Tips

1. Evaluate your transfer options. 
2. Minimize taxes by rolling Roth to Roth and traditional to traditional.  
3. Think twice before you do an indirect rollover. 
4. Be wary of "Free" or "No Fee" claims. 
5. Realize that conflicts of interest exist.
6. Compare investment options and other services. 
7. Understand fees and expenses. 
8. Engage in a thoughtful discussion with your financial or tax professional. 
9. Age matters. 
10. Assess the tax implications of appreciated company stock. 

“The decision to move your retirement nest egg or stay put is an important one. In many cases, you don't have to act immediately upon switching jobs or retiring. Take the time to assess your options. Ask questions and do your homework to determine what is best for you.” Read the details from FINRA at: http://www.finra.org/Investors/ProtectYourself/InvestorAlerts/RetirementAccounts/P436001?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+FINRAInvestorAlerts+%28FINRA+Investor+Alerts%29

The Perfect Mother's Day GIft

I’ve seen the eye-popping prices being advertised for imported cut flowers for Mother’s Day…

Few of us need a whole box of chocolates…

Mother’s Day weekend is one of the busiest of the year at restaurants (long waits, crowds and less than the perfect meal)…

I know the economy needs your $$ but instead of dropping all that money on extra calories and flowers (imported from Central America with a shocking carbon footprint) that will quickly fade, consider giving mom a gift of Financial Security!

Collectively almost every family can afford to give mom…  an Individual Retirement Account for Mother’s Day!

If mom is in good $ shape, what about your daughter? Does she need help launching a life of financial security? And it’s OK to think about yourself, too. One of the greatest gifts we can give our family is to assure them that we are financially secure.

Come to Financial Planning for Women on Wednesday, May 9 to learn about great low-cost mutual funds for IRAs and other long term goals.

12:30-1:30 in USU TSC room 336, or

7-8:30 pm at the USU Family Life Center (more time for Q&A)

Three students from my Advanced Family Finance Class will be presenting their mutual fund research results.

Refreshments provided!