New Investor Blog Series from BFG – IRA Basics

Baron Financial Group’s New Investor Blog Series will consist of monthly blog posts that provide general information on a range of investment topics. The series aims to provide new investors with basic investment information.

*This blog post is the first in the series*

 A 60-second read by the Baron Team:  What is an IRA? An IRA is an Individual Retirement Account. There are two types of IRAs – Traditional and Roth. 

Traditional IRA:

  • Who is eligible? Anyone can invest in an IRA if they are under the age of 70 ½ and are still working
  • How much can you contribute? For 2019, you can contribute up to $6,000 per year based on your earned income (or $7,000 if you are over the age of 50)
  • What are the tax implications? Investment income and growth is tax-deferred until you begin to make withdrawals
  • Are contributions tax-deductible? Yes (In most Cases)
  • Are there withdrawal penalties? Yes, withdrawals made before age 59 ½ are subject to a 10% penalty (There are exceptions)
  • What are the distribution rules? Withdrawal is mandatory starting at age 70 ½

Roth IRA:

  • Who is eligible? Working taxpayers with gross income below $137,00  or $203,000 for married couples for 2019 tax year (Phaseouts apply)
  • How much can you contribute? For 2019, you can contribute up to $6,000 per year based on your earned income (or $7,000 if you are over the age of 50)
  • What are the tax implications? With Roth IRAs you pay taxes upfront, so withdrawals made upon retirement are tax-free
  • Are contributions tax deductible? No
  • Are there withdrawal penalties? None, if a qualified distribution
  • What are the distribution rules? No requirement to make withdrawals by age 70 ½

What are the main differences between the two?

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BFG’s Nicholas Scheibner Quoted in The New York Times

“5 Steps to Take if the Bull Market Run Has You Thinking of Unloading Stocks”, an article written by Tara Siegel Bernard in the Aug. 22, 2018 edition of The New York Times, discusses the extended bull market that we are currently experiencing and what, if anything, we should do differently with our investments.  According to Baron Financial Group’s, Nicholas Scheibner, CFP®,

Many people feel that they only have two options: Invest or not invest,” said Nicholas Scheibner, a financial planner with Baron Financial Group. “However, you have a third option — adjust.”

 Read the entire New York Times article here

Please reach out to the Baron Team for a second opinion on your portfolio.

The Importance of a “Trusted Contact”

A 30-second read by the Baron Team:  Increasingly, we understand that there can be a need to have an additional person like a trusted family member or friend we can contact to ensure the well-being of a client.  As we age, we may start to see that a person’s mindfulness and mental capacity diminishes.  For some, early-onset dementia or other illness necessitates having a trusted contact in place at an earlier age.  In those instances, who can you trust to be contacted on your behalf, if necessary? 

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Should You Reduce the Amount of Stocks in Your Portfolio When You Retire?

A 60-second read by Nicholas Scheibner: The theory of, “reduce my risk as I near retirement” has been a long-standing investment mantra for many years.  However, a reduction in risk at retirement age may not be the best course of action for every investor. The theory of reduction in risk as you near retirement needs to be looked at more closely. 

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