Tax-Advantageous Ways to Gift to Charities: Beneficiary Designations on IRA’s

A 30-second read by Nicholas Scheibner:  One of the easiest ways to gift money to a charity in your estate plan is to name the charity as a beneficiary on your IRA or 401(k).  Upon your death, the beneficiary designated on an IRA or 401(k) will receive their percentage of the assets very quickly.  In addition, the designated beneficiary is independent of the will.

If you have an IRA, with $100,000, for example, you can name your children as 80% beneficiaries and a charitable organization as a 20% beneficiary.  When you pass, your children will inherit $80,000 and the charity will receive $20,000.  You can do this very easily by contacting the custodian who holds your investments.  You do not need to update your will in order to name a beneficiary on a retirement account.  

Contact Baron Financial Group to discuss tax-saving gifting strategies.

Disclosure: This material is not intended to be relied upon as a forecast, research, tax or investment advice.  Please consult your financial planning and tax professional for personal advice.

The Most Common 1099-R Codes When Filing Your Taxes

A 60-second read by Nicholas Scheibner:   You will receive a form 1099-R if any money has been moved out of a retirement account.  How much you will pay in taxes will depend on how the money is moved. You want to make sure any movement out of a retirement account is done properly, and the correct code is applied when you file your taxes.  The code will appear in box 7 of the 1099-R. 

Here are some of the most common codes used on the form, and what they mean:

Continue reading “The Most Common 1099-R Codes When Filing Your Taxes”

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?

Continue reading “New Investor Blog Series from BFG – IRA Basics”