The IRA is one of the most popular retirement savings vehicles. There are several variations, but in recent years, the Roth IRA has become an increasingly popular option. Roth IRA balances grew 51 percent from 2010 to 2013, while traditional IRA balances grew 28 percent over that same period. In 2013 more than $6 billion was contributed to Roth accounts, while only $4.61 billion was contributed to traditional IRAs.1
The Roth’s unique tax treatment is a big factor in its popularity. With a Roth you make after-tax contributions, which means you can’t take a deduction for the money you put into the account. However, your funds grow tax-deferred inside the Roth, and your withdrawals of earnings and interest are tax-free as long as you wait until age 59 ½. That means you can use a Roth to create a tax-free income stream in retirement.
Unfortunately, many people are unable to contribute to a Roth. Your income may exceed the Roth’s limitations. It’s possible that you’ve accumulated much of your retirement assets in a 401(k) or traditional IRA and don’t want to start a Roth from scratch.
Is retirement part of your plans for 2018? If so, you may be busy wrapping up final projects at work and planning fun and exciting ways to fill your time after you retire. This is also a good time to take any final planning steps that could solidify your finances in retirement.
A financial professional can help you identify potential gaps and opportunities and take action. If you’re not working with a professional on your retirement strategy, now may be the time to do so. Below are four important issues to address with your financial professional before you retire:
It’s that time again. A new year has arrived. For many, the new year is a time for resolutions. Weight loss is a popular resolution, as are goals related to education and career advancement. Unfortunately, most people don’t stick with their resolutions. A recent study found that nearly 80 percent of all resolutions fail by February.1
Perhaps you have some financial goals among your list of resolutions. That could be a wise idea. With some simple changes in habit and behavior, you can significantly improve your financial picture. The key, of course, is to stay consistent and stick with your resolutions.
Are you considering making a sizable financial gift to a friend or family member? A financial gift can be a great way to make a difference in a loved one’s life. It can also be an effective estate planning strategy, as gifting may potentially remove assets from your estate. That could reduce the amount of assets that face probate and the estate tax.
Gifting could trigger its own set of taxes, though. You may not know that the gift tax exists or how it works. Depending on the size of your gift, you could face up to a 40 percent gift tax.1 If you fail to pay the tax, the recipient may face additional tax obligations.
What is your attitude towards financial planning? Do you look at it from a comprehensive perspective, analyzing all your financial goals and developing a strategy to achieve all your objectives? Or do you plan for specific goals and needs as they arise? Or, perhaps, do you not do any planning at all?
The Certified Financial Planner Board of Standards published a study about Americans’ attitudes towards financial planning. It found that most Americans fall into one of four distinct groups: Comprehensive Planners, Basic Planners, Limited Planners and Non-Planners.1
The parades up Pennsylvania Avenue have ended and the champagne bubbles have burst in ernest celebration over the nation’s capital after one of the wildest election cycles in United States history. Yes, the parade of pundits & prognosticators in the financial press spouting off predictions for the year ahead is about over too. Once again as a new Populist Camelot emerges in D.C., the Madison Ave and Wall Street Wizards are telling us in the Money Magazines of the world that if we just buy and hold through any financial crisis, our children and legacies will be taken care of. In fact, Money Magazine itself in the January issue, serves up the theory or myth of “buy and hold” again as one of it’s top tips as it has after every correction or bull market. The lesson, this beneficial magazine misses always is how much buy and hold’s success depends upon family health & age, depth of desperation, and the extent of the bear market decline. In another words, the four words to run far and fast from are “this time it’s different”.
Here at MasterPlan Retirement Consultants, we strive to keep you up-to-date with informative articles. Read on for more details of the latest and greatest news.