45 YEARS
BUSINESS | We’re in the Money
SIX POTENTIALLY COSTLY MISTAKES TO AVOID ON YOUR IRAS BY ALEX JONES
With more than $7.2 trillion invested in American’s IRAs1, chances are you have used this tax advantaged savings account. As we start 2017, work towards preserving your savings for your retirement and family by avoiding these six common mistakes. 1. NOT MAXIMIZING YOUR ANNUAL CONTRIBUTIONS Individuals often fail to contribute the maximum amount annually allowed for their IRA’s. For 2016 and 2017, the maximum IRA contribution limit is $5,500 or $6,500 if you are over the age of fifty. An IRA is a tax-advantaged account for retirement savings, and it takes time and consistency to reap the full benefits. You can still make your IRA contributions for 2016 until April 18th. Don’t miss your opportunity to shelter more money from taxes. 2. NOT TAKING ADVANTAGE OF THE SPOUSAL IRA FOR A NONWORKING SPOUSE People assume that because a spouse does not work they cannot contribute to an IRA, as they have no earned income. Referred to as the “Spousal IRA,” this rule allows the non-working spouse to contribute under the same rules as the working spouse. 3. NOT TAKING ADVANTAGE OF A ROTH IRA Many individuals skip the Roth IRA because they do not receive an immediate tax deduction. The Roth IRA offers tax deferral on any earnings in the account, and withdrawals may be tax-free if the account is older than five years and you are over the age of fifty-nine-and-a-half. In addition, the IRS does not require you to take Required Minimum Distributions (RMDs) at age seventy. You can withdraw the contribution you made to your Roth at any time without penalties or taxes. This useful trait can turn your Roth into an emergency fund.
4. NOT NAMING OR UPDATING IRA BENEFICIARIES Failing to name a beneficiary and its contingent beneficiaries on an IRA may result in the distribution of the IRA to the owner’s estate, resulting in accelerated distributions and taxes. Not updating beneficiaries and coordinating with your other estate documents can lead to unintended results. An example would be an ex-spouse receiving assets because beneficiaries weren’t updated. 5. NOT TAKING RMDS Upon reaching age seventy-and-a-half the IRS requires you to start taking annual RMDs from your IRA. The required withdrawal is calculated by adding all of your IRA account balances and multiplying by the IRS “Uniform Lifetime Table.” If you fail to take your RMD, you are subject to a 50 percent tax. If you make a mistake and forget to take your RMD you can appeal to the IRS to have the penalty removed. However, your appeal is not guaranteed. 6. MISSING IMPORTANT DATES When you inherit an IRA, you must decide whether to take distributions annually over life expectancy or within five years. Either way, you must start taking distributions by December 31st after the year of death. If you fail to select an option, the IRS will default to five-year payout, which may dramatically affect your taxes. Withdrawals from a Roth IRA prior to age fifty-nineand-a-half or prior to the account being opened for five years, may result in a 10 percent IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.
1Source: ICI (Investment Company Institute), “Appendix: Additional Data on IRA Ownership in 2013,” ICI Research Perspective, Vol. 19, No. 11A, November 2013.
YOU WILL SPEND UPWARDS OF
45 YEARS
working to support your lifestyle, provide for your family, and set aside money for retirement. With all your hard work you Deserve the Opportunity to Retire Comfortably, and Stay Retired
Our LPL Financial Planners are independent and solely focused on your holistic goal-based financial plan. As part of Dave Ramsey’s SmartVestor program, we use comprehensive principles to plan your financial future with confidence. Contact our office today to schedule a complimentary financial planning session with one of our experienced planners.
(o) 615-333-7653 (f ) 888-681-1972 www.GuardingThePath.com [email protected] The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Securities and Advisory services offered through LPL Financial, a registered investment advisor. Member FINRA & SIPC. Dave Ramsey’s SmartVestor Pro is a directory of investment professionals. Neither Dave Ramsey nor SmartVestor are affiliates of Guardian Financial or LPL.
SIX POTENTIALLY COSTLY MISTAKES TO AVOID ON YOUR IRAS BY ALEX JONES
With more than $7.2 trillion invested in American’s IRAs1, chances are you have used this tax advantaged savings account. As we start 2017, work towards preserving your savings for your retirement and family by avoiding these six common mistakes. 1. NOT MAXIMIZING YOUR ANNUAL CONTRIBUTIONS Individuals often fail to contribute the maximum amount annually allowed for their IRA’s. For 2016 and 2017, the maximum IRA contribution limit is $5,500 or $6,500 if you are over the age of fifty. An IRA is a tax-advantaged account for retirement savings, and it takes time and consistency to reap the full benefits. You can still make your IRA contributions for 2016 until April 18th. Don’t miss your opportunity to shelter more money from taxes. 2. NOT TAKING ADVANTAGE OF THE SPOUSAL IRA FOR A NONWORKING SPOUSE People assume that because a spouse does not work they cannot contribute to an IRA, as they have no earned income. Referred to as the “Spousal IRA,” this rule allows the non-working spouse to contribute under the same rules as the working spouse. 3. NOT TAKING ADVANTAGE OF A ROTH IRA Many individuals skip the Roth IRA because they do not receive an immediate tax deduction. The Roth IRA offers tax deferral on any earnings in the account, and withdrawals may be tax-free if the account is older than five years and you are over the age of fifty-nine-and-a-half. In addition, the IRS does not require you to take Required Minimum Distributions (RMDs) at age seventy. You can withdraw the contribution you made to your Roth at any time without penalties or taxes. This useful trait can turn your Roth into an emergency fund.
4. NOT NAMING OR UPDATING IRA BENEFICIARIES Failing to name a beneficiary and its contingent beneficiaries on an IRA may result in the distribution of the IRA to the owner’s estate, resulting in accelerated distributions and taxes. Not updating beneficiaries and coordinating with your other estate documents can lead to unintended results. An example would be an ex-spouse receiving assets because beneficiaries weren’t updated. 5. NOT TAKING RMDS Upon reaching age seventy-and-a-half the IRS requires you to start taking annual RMDs from your IRA. The required withdrawal is calculated by adding all of your IRA account balances and multiplying by the IRS “Uniform Lifetime Table.” If you fail to take your RMD, you are subject to a 50 percent tax. If you make a mistake and forget to take your RMD you can appeal to the IRS to have the penalty removed. However, your appeal is not guaranteed. 6. MISSING IMPORTANT DATES When you inherit an IRA, you must decide whether to take distributions annually over life expectancy or within five years. Either way, you must start taking distributions by December 31st after the year of death. If you fail to select an option, the IRS will default to five-year payout, which may dramatically affect your taxes. Withdrawals from a Roth IRA prior to age fifty-nineand-a-half or prior to the account being opened for five years, may result in a 10 percent IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.
1Source: ICI (Investment Company Institute), “Appendix: Additional Data on IRA Ownership in 2013,” ICI Research Perspective, Vol. 19, No. 11A, November 2013.
YOU WILL SPEND UPWARDS OF
45 YEARS
working to support your lifestyle, provide for your family, and set aside money for retirement. With all your hard work you Deserve the Opportunity to Retire Comfortably, and Stay Retired
Our LPL Financial Planners are independent and solely focused on your holistic goal-based financial plan. As part of Dave Ramsey’s SmartVestor program, we use comprehensive principles to plan your financial future with confidence. Contact our office today to schedule a complimentary financial planning session with one of our experienced planners.
(o) 615-333-7653 (f ) 888-681-1972 www.GuardingThePath.com [email protected] The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Securities and Advisory services offered through LPL Financial, a registered investment advisor. Member FINRA & SIPC. Dave Ramsey’s SmartVestor Pro is a directory of investment professionals. Neither Dave Ramsey nor SmartVestor are affiliates of Guardian Financial or LPL.
