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The purpose of this blog is to present some basic information about Individual Retirement Accounts (IRAs): Traditional and Roth IRAs and the differences between them. Inherited IRAs have different withdrawal guidelines, and these should be carefully reviewed. Contributions for tax-year 2024 can be made from January 1, 2024 – April 15, 2025. What is an IRA? An IRA is an Individual Retirement Account...
Our September 12th blog post focused on some basic information about Traditional Individual Retirement Accounts (IRAs). This post provides guidelines for taking withdrawals from Traditional IRAs that have been inherited. Reference this flow chart for guidance with your RMDs from an Inherited IRA. If you inherit an IRA, you must determine:
Gregory Cannillo, MBA, FPQP®, is quoted on this topic, answering a reader’s question on NJMoneyHelp.com by Karin Price Mueller, “Should I lower 401(k) contributions to do a Roth IRA?”, originally published in February 2024. Your ability to contribute to a Roth IRA is dependent upon multiple concerns:
Victor Cannillo, NAPFA-Registered Financial Advisor, is quoted on this topic, answering a reader’s question on NJMoneyHelp.com by Karin Price Mueller, “I’m 69. How long can I contribute to a Roth?”, originally published on June 27, 2023. For 2023, the total contribution limit is $6,500 per year; $7,500 if you’re over 50. You can contribute to your Roth IRA in perpetuity as long as you’re still…
James Suazo, ChFC®, is quoted on this topic, answering a reader’s question on NJMoneyHelp.com by Karin Price Mueller, “I have an inherited IRA. How soon do I have to take distributions?”, originally published on November 30, 2021. If your inherited IRA falls under the 10-year rule, the IRS has clarified the rule in their publication 590-B...
The penalty for not taking one’s Required Minimum Distribution (RMD) from an IRA, according to the IRS, can be 50% of the amount that was not distributed. For example, if one is required to take $1,000 of RMD this year, failing to do so may cause a $500 tax bill.
Before deciding which kind of IRA to open, the first thing you would want to do is check with your employer about 401(k) offerings. If your employer provides any company match into a 401(k) you will want to contribute to that account before you start an IRA. That way, you are able to take advantage of the “Free Money” provided by your employer. A Roth IRA is usually best for someone who is in a lower tax-bracket. The idea is that you want to pay taxes in the lowest bracket possible. So if you are making a lower income than you may in the future, you would want to pay taxes now, using a Roth.
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 are the owner of an IRA (Individual Retirement Account) you may be aware that at age 70 ½ you are required to withdraw a small portion of your account and pay taxes on the amount withdrawn.