Non-Deductible IRA Contributions are Under Utilized by High Income Earners
(ContentDesk) February 1, 2006 -- As they rapidly approach retirement age, many savers find that they need to save more than the maximum annual 401k contribution.
Many of these individuals would like to contribute more money to tax deferred investment accounts, but have been told they are ineligible to contribute to an IRA for one of the following reasons:1. They are an active participant in an employer sponsored retirement plan (pension plan, 401k, SEP, or SIMPLE) 2. Although not covered by an employer plan, a spouse is, and joint income exceeds $160,000.The good news for savers with a little more money to sock away is that almost any individual is entitled to contribute up to $4000 per year to a traditional IRA.
Regardless of income.
Regardless of whether or not they are covered by an employer plan.
Of course, with the IRS there is always a catch.
You cant take a deduction for your contributions if you are over the specified income limits.
Still, you should not dismiss the benefits of tax deferred growth
just because you cant take a current year tax deduction for the contribution.
A nondeductible IRA contribution still allows your investment earnings to accumulate on a tax deferred basis until distribution.
You will need to file a special form with your tax return if you have made non-deductible IRA contributions.
In addition, if you are mixing deductible and non-deductible contributions within a single account, you need to be careful in your record keeping to avoid paying tax twice when you take distributions. However, for most savers the ability to boost their familys tax deferred savings by up to $8000 per year with an individual and spousal IRA contribution is well worth a little paperwork and recordkeeping.
The value of tax-deferred investing varies among individuals depending on, among other things, current tax bracket, years to retirement, and overall financial situation. Generally speaking, the higher your tax bracket and the longer your investment time horizon, the more important tax deferral is to your investment strategy.
Speak with your financial planner or tax advisor regarding the possible benefits of making non-deductible IRA contributions.
It may be a useful weapon to add to your retirement planning arsenal.
James Kinney is an independent financial planner based in Somerville, NJ.
His firm specializes in retirement planning for individuals and small business owners..
SEP IRA Contributions for 2003 Can Still Be Made
Alexandria, Virginia (ContentDesk) January 22 2004--Small business owners still have a chance to cut their 2003 taxes by contributing to a SEP-IRA before filing their business tax return.
Employer contributions made to a Simplified Employee Pension-Individual Retirement Account, known as a SEP plan, are deductible for 2003, even if the SEP plan is opened and the contributions are made in 2004."A SEP-IRA allows small business owners and sole proprietors to cut their tax liability by making retirement contributions for their eligible employees," says Daniel Lamaute, retirement specialist at InvestSafe.com, a retirement planning website for the self-employed."The SEP-IRA has several advantages for employers", says Lamaute, "Employers get a tax deduction, and the SEP-IRA contribution is not taxed as income to the employees.
The earnings within the SEP IRA grow taxed deferred until the participant pulls the money out, usually at retirement." For 2003, employers can contribute...
Ira > SEP IRA Contributions for 2003 Can Still Be Made
Invest In Real Estate With a 401K or Roth IRA: Wisconsin And Michigan Recreational Properties, Waterfront Or Acreage Can Qualify
Wisconsin Rapids, WI (ContentDesk) February 4, 2006 --A new trend to consider for investors thinking about their retirement funds involves the same idea that many people are utilizing for todays wealth-building mechanisms; real estate.Most banks and brokerage companies limit your choices for retirement investment to certificates of deposit, stocks, mutual funds, annuities, and similar financial instruments. But Section 408 of the Internal Revenue Code permits individuals to purchase land and other real estate with funds held in many common forms of IRAs, including a traditional IRA, a Roth IRA, and a Simplified Employee Pension plan, or SEP-IRA.While some restrictions apply to properties and their uses, a person who intends to utilize the property primarily as an investment tool for retirement can derive the benefits of appreciative land values to enhance their nest eggs.
Also, the ability to locate and lock into a property that one may decide to build a retirement home on...
Ira > Invest In Real Estate With a 401K or Roth IRA: Wisconsin And Michigan Recreational Properties, Waterfront Or Acreage Can Qualify
A Roth IRA, Is It For You?
Roth IRA's are some of the most sought after investments. But, why? What are they? Why should you invest in them? For many people, the investment world is somewhat of a mystery. We just do not know what it is all about. But, we can easily learn by taking the time to understand all the various aspects of investing. We can start here with learning about Roth IRA and how it can benefit you.First, Roth IRA was named after the man who helped push through legislation for it.
His name was William Roth. He was a United States Senator. He was known as a conservative and helped to pass other tax cuts as well in the 1980's. But, we want to know about his specific contribution to the Roth IRA. The Roth IRA is an individual retirement account.
It is used throughout the United States. This plan is meant to help individuals save money for retirement by giving them tax advantages for doing so. But, there are a number of different retirement accounts. Some of these retirement plans can...
A Roth IRA, Is It For You?
Ira > A Roth IRA, Is It For You?
How to Stretch Your IRA Tax-FREE
(ContentDesk) May 24, 2004 -- Income taxes are a great inhibitor to building wealth. I've talked about the power of stretching an IRA across multiple generations and how it can build tremendous wealth. Now, I'll show you how it can be done income tax-free.Last week I shared a little-known secret of how to legally turn an investment of $3500 per year into millions and millions of dollars. No, it wasn't by winning the lottery! It was through the power of ?stretching' an IRA. If you missed it you have to read it under the article archive at www.guardingyourwealth.com.
(Mr. Voudrie responds to questions from readers on an almost daily basis.
If you would like clear straightforward unbiased answers to your financial questions, contact e-mail protected from spam bots)Most people think that when they inherit an IRA that they have to take all the money out and pay taxes on it right away. But the IRS...
Ira > How to Stretch Your IRA Tax-FREE
A SECRET WAY A NEWBORN BABY CAN OPEN A ROTH IRA!
The Roth is kind of weird until you get used to it in terms of how much you can put in (contribute) each year depending on how much you earn (compensation). Because of this you really have two limits, one dealing with your compensation and the other dealing with your contribution. Let me explain.The first contribution limit has to do with compensation, in other words you have to be making some money somewhere. As mentioned, you must have some form of compensation to qualify to make a contribution, but there is also an income limit that says whether or not you can put money in; make a contribution. If your adjusted gross income exceeds these limits, you are no longer eligible to contribute to a Roth IRA.
In 2004, the adjusted gross income limits were:?If your tax filing status is "Married Filing Jointly" - $160,000 ?If your tax filing status is "Married Filing Separately" (and you live with your spouse) - $100,000 ?If your tax filing status is "Single", "Head of Household" or ...
A SECRET WAY A NEWBORN BABY CAN OPEN A ROTH IRA!
Ira > A SECRET WAY A NEWBORN BABY CAN OPEN A ROTH IRA!