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IRA

Back-door Roth Blessed by Congress

The back-door Roth contribution method has always had an air of skepticism around it. With the passage of TCJA, the skepticism should be gone.

Roth Recharacterization is No Longer Allowed

Although used by few taxpayers, the Roth conversion recharacterization strategy is no longer allowed after the passage of the TJCA 2017.

Non-Spouse Rollover of Inherited IRA or Plan

Is a non-spouse rollover of an inherited IRA allowed? It depends on what you mean by rollover. There are many restrictions for the non-spouse beneficiary.

Creditor Protection for Retirement Plan Assets

Are my retirement accounts protected from a creditor in the case of bankruptcy? In most cases the answer is yes, but not always.

A SIMPLE Kind of Plan

The SIMPLE Plan is a type of retirement account for small businesses that is simpler (ah hah!) to administer and more portable than the 401(k) plans that are more appropriate for larger businesses.  SIMPLE is an acronym (probably a backronym, more likely) which stands for Savings Incentive Match PLan for Employees. A SIMPLE typically is based on an IRA-type account, but could be based on a 401(k) plan. What we’ll cover here is the IRA-type of SIMPLE plan.  The difference (with the 401(k)-type) is that there are more restrictions on employer activities, and less room for error (as can be the case with 401(k) plans). A SIMPLE Kind of Plan Much like a regular 401(k) plan, a SIMPLE Plan is an agreement between the employer and employee where the employee agrees to a salary deferral.  This deferral effectively reduces the employee’s taxable take home pay, and the employer then contributes […]

Recharacterizing

How much do you know about recharacterizing IRA contributions? I bet it’s not enough to keep yourself out of trouble, if the need arises…

Your 401k and IRA in 2018

Recently, the IRS just announced the contribution limits for 401k plans (including 403b and 457 plans) as well as IRAs. Additionally, the IRS also announced changes to the income phase-outs for traditional IRA deductibility and Roth IRA eligibility. Let’s start with the 401k plans. For 2018, the IRS increased the contribution limits to $18,500, up $500 from $18,000 last year. The catch-up contribution for those age 50 or over remains unchanged at $6,000. $500 may not seem like much, but think of it this way – you get to give yourself a $500 raise! For those interested in maxing out their 401k plans in 2018, here’s the breakdown depending on whether you’re paid monthly, 24 weeks per year or 26 weeks per year. If you’re paid monthly, the contribution is $1,541.66. This brings you just eight cents under the $18,500 max annually. If you’re paid 24 weeks per year, then […]

IRA Distribution Pro-Rata Rule

How does the pro-rata rule for IRA distributions work? Can it cause problems as I implement the back-door Roth conversion strategy?

5 No-No’s for IRA Investing

It is generally well-known that in an IRA account you have a wide range of investment choices. These choices are typically only limited by the custodian’s available investment options.  However, there are specific prohibited transactions that cannot be accomplished with IRA funds. Often these prohibited transactions can cause your IRA to be disqualified, which can result in significant tax and penalty, along with loss of the tax-favored status of the funds. What’s Not Allowed for IRA Accounts? Self-Dealing.  You are not allowed, within your IRA, to make investments in property which benefits you or another disqualified person.  A disqualified person includes your fiduciary advisor and any member of your family, whether an ancestor, spouse, lineal descendant (child) or spouse of a lineal descendant.  It is important to note that this limit applies to both present and future use of a property. So if you purchased a condo and rented it […]

The Earliest Age You Can Withdraw Retirement Money Without Penalty

Do you know what is the earliest age you can be and still be eligible to withdraw money from a deferred retirement account without penalty?

Where To Establish Your IRA Account

There are many institutions where you can establish your IRA account. This article reviews the pros and cons of the main options.

Higher Education Expenses Paid From an IRA

An IRA can be used to pay for higher education expenses. This avoids the penalty for early withdrawal that occurs if you’re under age 59 1/2.

Traditional IRA v. Roth IRA – Compare & Contrast

What are the differences and similarities between traditional IRA and Roth IRA? This article gives you the basics in a comparison and contrast.

Calculating your Required Minimum Distribution

Learn how to calculate your required minimum distribution for your IRA, 401k, 403b or other qualified retirement plan.

Adjusting Withholding Saved 44% of the Tax Bill

Adjusting withholding on your income taxes can produce some surprising results. See how one taxpayer saved 44% in taxes by adjusting his withholding.

Tax Impacts of Early Withdrawals from Your IRA

When you make early withdrawals from an IRA or other retirement plan there are tax ramifications, depending on the circumstances of your withdrawal.

Rollover Risk

The idea of an IRA rollover, or a rollover IRA, isn’t necessarily a cosmic mystery – this happens all the time.  You leave your job, and you rollover your 401(k) to an IRA.  No problem, right?  Unfortunately, there often are problems with the process of moving funds from one account to another – because there are a couple of very restrictive rules regarding how this process can and cannot be done.  It’s not terribly complex, but you’d be surprised how easily these rules can trip you up. Rollover Risk Let’s start with a few definitions: A Rollover is when you take a distribution from one qualified plan or IRA custodian, in the form of a check made out to you, and then you re-deposit that check into another qualified plan or IRA account (at a different custodian). A Trustee-to-Trustee Transfer (TTT), even though it is often referred to as a […]

How to Make Your Saving Automatic

Sometimes it can be difficult to save for emergencies or for retirement. While physically not demanding, the mental strain can be a hump that is hard to get over. In other words, we experience a little bit of “pain” or mental anguish if we have to physically hand over money or write a check. So how can we overcome this anguish? Automate. First, determine how much you need for an emergency. This can either be to start the fund or to replenish amounts that have been used. Generally, it’s a good idea to have 3 to 6 months of non-discretionary expenses (expenses that don’t go away if you lose your job or become disabled) set aside in an FDIC insured bank account. Some individuals may find it more comforting to have 6 to 9 months or 9 to 12 months. It’s up to you. For retirement, I recommend saving 15 […]

6 Year End Tips for a Financially Productive 2017

As 2016 comes to a close in a few weeks and we start into 2017, here are some good tips to consider to start 2017 off with some good strategies that will hopefully become habits. If you’re not doing so already, set up your payroll deductions to save the maximum to your 401k. There’s plenty of time to your payroll allocated so your deductions start coming out on the first paycheck in January. The 2017 maximum contributions are $18,000 for those under age 50 and $24,000 for those age 50 or older. To deduct the max, simply take the number of pay periods you have annually and divide it into your maximum contribution amount. This will allow you to save the maximum amount over 2017. Consider doing the same to maximize your IRA contribution. Those limits are $5,500 (under 50) and $6,500 (over 50) respectively. Check your allowances on your […]