Author: Joanne
Source: articleage.com
Of all the forms of assets breeding investments, annuities are
some of the a lot of arguable ones. Accomplishment - acquired from the
Latin chat 'annus' - is basically an allowance artefact awash by
insurance companies through authorised agents. This blazon of
investment facilitates a alternation of payments in the
future, in a authentic manner, in barter for an up-front payment
of money.
There is a accumulation of individuals who anticipate that annuities are a
waste of time and there are abundant bigger accoutrement of investment such
as banal bazaar or property. But afresh again both the aloft forms
of investment are accessible to blast and do not account actual high
in allegory to annuities, with account to safety.
Annuities are frequently of two types aboriginal Deferred and the other
Fixed. In the case of 'Deferred Annuity', the payments are made
usually on a account base for a amount of years. This anatomy of
annuity makes abiding that a adolescent getting acquires a acceptable income
in his afterwards years. In the closing anatomy that is 'Fixed or
Immediate Annuity', the client pays a ample basic sum
usually to an allowance aggregation and payments activate soon
thereafter.
One of the better hurdles faced by annuities today is
inflation. At the alpha the agreed sum to be paid out by the
insurance aggregation ability attending accomplished and actual heart
warming, but aggrandizement can abrade the amount of your investment at
an alarming rate.
Another draw aback with annuities is that instead of getting a
long-term basic accretion the balance, income tax bracket, on annuities are taxable
just as assets is. Plus there are assertive acrimonious rules and
regulations administering the drop that may not be customer
friendly. One of which is that the chump cannot abjure the
money until he turns 59.5 years or abroad he would be answerable a
10% amends for abandoning the aforementioned prematurely.
So why should you accede Annuities as a approach of investment?
Frankly any alone planning to advance in annuities should be
the one who is not already accidental his best to other
forms of retirement schemes. However, annuities are an excellent
mode of investment for individuals in college tax brackets. In
those years of top tax liabilities, annuities accomplish a lot of
sense, as these accumulation are tax exempt. Tax is alone due when
income is accustomed for the plan. That agency you alpha drawing
your accomplishment afterwards you accept chock-full earning a top salary.
Showing posts with label investment. Show all posts
Showing posts with label investment. Show all posts
Thursday, December 31, 2009
Sunday, December 27, 2009
Investors: Avoid These 5 Common Tax Mistakes
Author: David Twibell
Source: articleage.com
For abounding investors, and even some tax professionals, allocation through the circuitous IRS rules on investment taxes can be a nightmare. Pitfalls abound, and the penalties for even simple mistakes can be severe. As April 15 rolls around, accumulate the afterward 5 accepted tax mistakes in apperception - and advice accumulate a little added money in your own pocket.
1. Declining To Annual Gains
Normally, if you advertise an investment for a profit, you owe a tax on the gain. One way to lower that tax accountability is to aswell advertise some of your accident investments. You can again use those losses to annual your gains.
Say you own two stocks. You accept a accretion of $1,000 on the aboriginal stock, and a accident of $1,000 on the second. If you advertise your acceptable stock, you will owe tax on the $1,000 gain. But if you advertise both stocks, your $1,000 accretion will be annual by your $1,000 loss. That's acceptable annual from a tax standpoint, back it agency you don't accept to pay any taxes on either position.
Sounds like a acceptable plan, right? Well, it is, but be acquainted it can get a bit complicated. Under what is frequently alleged the "wash auction rule," if you repurchase the accident banal aural 30 canicule of affairs it, you can't abstract your loss. In fact, not alone are you precluded from repurchasing the aforementioned stock, you are precluded from purchasing banal that is "substantially identical" to it - a ambiguous byword that is a connected antecedent of abashing to investors and tax professionals alike. Finally, the IRS mandates that you accept to bout abiding and concise assets and losses adjoin anniversary added first.
2. Miscalculating The Base Of Alternate Funds
Calculating assets or losses from the auction of an alone banal is adequately straightforward. Your base is artlessly the amount you paid for the shares (including commissions), and the accretion or accident is the aberration amid your base and the net accretion from the sale. However, it gets abundant added complicated if ambidextrous with alternate funds.
When artful your base afterwards affairs a alternate fund, it's simple to overlook to agency in the assets and basic assets distributions you reinvested in the fund. The IRS considers these distributions as taxable balance in the year they are made. As a result, you accept already paid taxes on them. By declining to add these distributions to your basis, you will end up advertisement a beyond accretion than you accustomed from the sale, and ultimately paying added in taxes than necessary.
There is no simple band-aid to this problem, added than befitting acceptable annal and getting active in acclimation your allotment and administration information. The added paperwork may be a headache, but it could beggarly added banknote in your wallet at tax time.
3. Declining To Use Tax-managed Funds
Most investors authority their alternate funds for the continued term. That's why they're generally afraid if they get hit with a tax bill for abbreviate appellation assets accomplished by their funds. These assets aftereffect from sales of banal captivated by a armamentarium for beneath than a year, and are anesthetized on to shareholders to address on their own allotment -- even if they never awash their alternate armamentarium shares.
Recently, added alternate funds accept been absorption on, income tax bracket, able tax-management. These funds try to not alone buy shares in acceptable companies, but aswell abbreviate the tax accountability on shareholders by captivation those shares for continued periods of time. By advance in funds geared appear "tax-managed" returns, you can access your net assets and save yourself some tax-related headaches. To be worthwhile, though, a tax-efficient armamentarium accept to accept both ingredients: acceptable investment achievement and low taxable distributions to shareholders.
4. Missing Deadlines
Keogh plans, acceptable IRAs, and Roth IRAs are abundant means to amplitude your advance dollars and accommodate for your approaching retirement. Sadly, millions of investors let these gems blooper through their fingers by declining to accomplish contributions afore the applicative IRS deadlines. For Keogh plans, the borderline is December 31. For acceptable and Roth IRA's, you accept until April 15 to accomplish contributions. Mark these dates in your agenda and accomplish those deposits on time.
5. Putting Investments In The Wrong Accounts
Most investors accept two types of investment accounts: tax-advantaged, such as an IRA or 401(k), and traditional. What abounding humans don't apprehend is that captivation the appropriate blazon of assets in anniversary annual can save them bags of dollars anniversary year in accidental taxes.
Generally, investments that aftermath lots of taxable assets or concise basic assets should be captivated in tax advantaged accounts, while investments that pay assets or aftermath abiding basic assets should be captivated in acceptable accounts. For example, let's say you own 200 shares of Duke Power, and intend to authority the shares for several years. This investment will accomplish a annual beck of allotment payments, which will be burdened at 15% or less, and a abiding basic accretion or accident already it is assuredly sold, which will aswell be burdened at 15% or less. Consequently, back these shares already accept a favorable tax treatment, there is no charge to apartment them in a tax-advantaged account.
In contrast, a lot of treasury and accumulated band funds aftermath a abiding beck of absorption income. Since, this assets does not authorize for appropriate tax analysis like dividends, you will accept to pay taxes on it at your bordering rate. Unless you are in a actual low tax bracket, captivation these funds in a tax-advantaged annual makes faculty because it allows you to adjourn these tax payments far into the future, or possibly abstain them altogether.
David Twibell is President and Chief Investment Officer of Flagship Basic Management, LLC, an investment advising close in Colorado Springs, Colorado. Flagship provides portfolio administration casework to high-net-worth individuals, corporations, and non-profit entities. For added information, amuse appointment www.flagship-capital.com.
Source: articleage.com
For abounding investors, and even some tax professionals, allocation through the circuitous IRS rules on investment taxes can be a nightmare. Pitfalls abound, and the penalties for even simple mistakes can be severe. As April 15 rolls around, accumulate the afterward 5 accepted tax mistakes in apperception - and advice accumulate a little added money in your own pocket.
1. Declining To Annual Gains
Normally, if you advertise an investment for a profit, you owe a tax on the gain. One way to lower that tax accountability is to aswell advertise some of your accident investments. You can again use those losses to annual your gains.
Say you own two stocks. You accept a accretion of $1,000 on the aboriginal stock, and a accident of $1,000 on the second. If you advertise your acceptable stock, you will owe tax on the $1,000 gain. But if you advertise both stocks, your $1,000 accretion will be annual by your $1,000 loss. That's acceptable annual from a tax standpoint, back it agency you don't accept to pay any taxes on either position.
Sounds like a acceptable plan, right? Well, it is, but be acquainted it can get a bit complicated. Under what is frequently alleged the "wash auction rule," if you repurchase the accident banal aural 30 canicule of affairs it, you can't abstract your loss. In fact, not alone are you precluded from repurchasing the aforementioned stock, you are precluded from purchasing banal that is "substantially identical" to it - a ambiguous byword that is a connected antecedent of abashing to investors and tax professionals alike. Finally, the IRS mandates that you accept to bout abiding and concise assets and losses adjoin anniversary added first.
2. Miscalculating The Base Of Alternate Funds
Calculating assets or losses from the auction of an alone banal is adequately straightforward. Your base is artlessly the amount you paid for the shares (including commissions), and the accretion or accident is the aberration amid your base and the net accretion from the sale. However, it gets abundant added complicated if ambidextrous with alternate funds.
When artful your base afterwards affairs a alternate fund, it's simple to overlook to agency in the assets and basic assets distributions you reinvested in the fund. The IRS considers these distributions as taxable balance in the year they are made. As a result, you accept already paid taxes on them. By declining to add these distributions to your basis, you will end up advertisement a beyond accretion than you accustomed from the sale, and ultimately paying added in taxes than necessary.
There is no simple band-aid to this problem, added than befitting acceptable annal and getting active in acclimation your allotment and administration information. The added paperwork may be a headache, but it could beggarly added banknote in your wallet at tax time.
3. Declining To Use Tax-managed Funds
Most investors authority their alternate funds for the continued term. That's why they're generally afraid if they get hit with a tax bill for abbreviate appellation assets accomplished by their funds. These assets aftereffect from sales of banal captivated by a armamentarium for beneath than a year, and are anesthetized on to shareholders to address on their own allotment -- even if they never awash their alternate armamentarium shares.
Recently, added alternate funds accept been absorption on, income tax bracket, able tax-management. These funds try to not alone buy shares in acceptable companies, but aswell abbreviate the tax accountability on shareholders by captivation those shares for continued periods of time. By advance in funds geared appear "tax-managed" returns, you can access your net assets and save yourself some tax-related headaches. To be worthwhile, though, a tax-efficient armamentarium accept to accept both ingredients: acceptable investment achievement and low taxable distributions to shareholders.
4. Missing Deadlines
Keogh plans, acceptable IRAs, and Roth IRAs are abundant means to amplitude your advance dollars and accommodate for your approaching retirement. Sadly, millions of investors let these gems blooper through their fingers by declining to accomplish contributions afore the applicative IRS deadlines. For Keogh plans, the borderline is December 31. For acceptable and Roth IRA's, you accept until April 15 to accomplish contributions. Mark these dates in your agenda and accomplish those deposits on time.
5. Putting Investments In The Wrong Accounts
Most investors accept two types of investment accounts: tax-advantaged, such as an IRA or 401(k), and traditional. What abounding humans don't apprehend is that captivation the appropriate blazon of assets in anniversary annual can save them bags of dollars anniversary year in accidental taxes.
Generally, investments that aftermath lots of taxable assets or concise basic assets should be captivated in tax advantaged accounts, while investments that pay assets or aftermath abiding basic assets should be captivated in acceptable accounts. For example, let's say you own 200 shares of Duke Power, and intend to authority the shares for several years. This investment will accomplish a annual beck of allotment payments, which will be burdened at 15% or less, and a abiding basic accretion or accident already it is assuredly sold, which will aswell be burdened at 15% or less. Consequently, back these shares already accept a favorable tax treatment, there is no charge to apartment them in a tax-advantaged account.
In contrast, a lot of treasury and accumulated band funds aftermath a abiding beck of absorption income. Since, this assets does not authorize for appropriate tax analysis like dividends, you will accept to pay taxes on it at your bordering rate. Unless you are in a actual low tax bracket, captivation these funds in a tax-advantaged annual makes faculty because it allows you to adjourn these tax payments far into the future, or possibly abstain them altogether.
David Twibell is President and Chief Investment Officer of Flagship Basic Management, LLC, an investment advising close in Colorado Springs, Colorado. Flagship provides portfolio administration casework to high-net-worth individuals, corporations, and non-profit entities. For added information, amuse appointment www.flagship-capital.com.
Wednesday, December 23, 2009
Pension or ISA: Which Investment Route Should You Take?
Author: Ray Prince
Source: download
Let's look at a recent client we worked with, James, a 45 year old dentist who had ฃ500 per month to invest.
James was confident that he could invest this money until his retirement at age 60, in 15 years time. He has a mixture of PEPs and ISAs, with an NHS Pension and a buy to let property.
Looking at this as one investment against another, we need to look at a like on like projection. So we will use a growth figure of 6% net of charges for both investments.
Because of the tax relief available for James at his highest rate (40%), the amount he can invest into a pension fund is ฃ835 pm compared to the ฃ500 pm to an ISA. Using projections of the future fund values over 15 years we get figures of:
Pension - ฃ238,810
ISA - ฃ143,000
It appears there is no contest, however, let's look at the figures a little closer.
The ISA fund is all available as tax free cash, whereas the Pension fund rules say a maximum of 25% of the fund can be taken as tax free cash which is ฃ59,702.
So if we calculate ฃ143,000 minus ฃ59,702 = ฃ83,297, this is the amount of tax free cash we have over and above the Pension route. The remaining ฃ179,107 in the Pension fund has to be used to buy a pension called an annuity. So the question now is what pension amounts could be available for James?
Taking an average example and using today's rates, a level pension of ฃ9,117 per annum would be achievable. However, will James be a higher or lower rate tax payer in retirement? This changes the picture somewhat, as the following after tax pensions would be applicable:
Higher rate tax payer - ฃ5,470 per annum
Lower rate tax payer - ฃ7,111 per annum
So to compare this to the ISA, we need to see how many years the pension needs to pay out to reach the ฃ83,297 value of the ISA fund, allowing for growth on the ISA fund at the same 6%, net of charges.
The answer is 17 years for the basic rate payer and 30 years for the higher rate payer! Not only is this is a massive difference between the two, but it also helps towards the decision whether to invest into a pension tax wrapper or an ISA.
Other considerations
-We have ignored any "pension drawdown" option
-The amounts you can contribute to pensions is currently far more generous than that available to ISAs
-Annuity rates, income tax bracket, on pensions may improve or reduce in the future
-The government may change the rules on either pensions or ISAs or even abolish the tax favourability on one or both
-Financial Advisers/Salespeople are often paid higher initial commission on pensions than ISAs so make sure your adviser is taking these factors into account, and not just selling you a policy that pays him/her the highest commission.
So what did we advise James to do?
In his case it all came down to the picture painted by his cash flow model. This enabled us to see how James's wealth would look in the future.
What was clear was that his NHS Pension would in itself take James into the higher rate tax bracket, and that a tax free cash fund was more attractive to him than more income that would be taxed at 40%. It would also aid James to gift money to his 2 children, to both help them financially and reduce his likely Inheritance Tax liability.
Therefore, James invested monthly sums into an investment Maxi ISA.
The Financial Tips Bottom Line:
In effect, there is no clear cut right or wrong. It always comes back to balancing the pros and cons of all the options available and making your decision based on thorough research.
Ray Prince is an Independent Financial Planner with Rutherford Wilkinson plc, and helps doctors and dentists get the best deals on mortgages, protection and investments, as well as helping them achieve their financial objectives.
Get your free retirement planning guide, exclusively for UK Resident Doctors and Dentists. Just visit http://www.financialtipsonline.com/ea3. You'll also receive the twice-monthly email newsletter 'Financial Tips' that will enable you to keep posted of all financial issues affecting doctors and dentists. He can be contacted on 01670 505522.
Rutherford Wilkinson plc is authorised and regulated by the Financial Services Authority.
Source: download
Let's look at a recent client we worked with, James, a 45 year old dentist who had ฃ500 per month to invest.
James was confident that he could invest this money until his retirement at age 60, in 15 years time. He has a mixture of PEPs and ISAs, with an NHS Pension and a buy to let property.
Looking at this as one investment against another, we need to look at a like on like projection. So we will use a growth figure of 6% net of charges for both investments.
Because of the tax relief available for James at his highest rate (40%), the amount he can invest into a pension fund is ฃ835 pm compared to the ฃ500 pm to an ISA. Using projections of the future fund values over 15 years we get figures of:
Pension - ฃ238,810
ISA - ฃ143,000
It appears there is no contest, however, let's look at the figures a little closer.
The ISA fund is all available as tax free cash, whereas the Pension fund rules say a maximum of 25% of the fund can be taken as tax free cash which is ฃ59,702.
So if we calculate ฃ143,000 minus ฃ59,702 = ฃ83,297, this is the amount of tax free cash we have over and above the Pension route. The remaining ฃ179,107 in the Pension fund has to be used to buy a pension called an annuity. So the question now is what pension amounts could be available for James?
Taking an average example and using today's rates, a level pension of ฃ9,117 per annum would be achievable. However, will James be a higher or lower rate tax payer in retirement? This changes the picture somewhat, as the following after tax pensions would be applicable:
Higher rate tax payer - ฃ5,470 per annum
Lower rate tax payer - ฃ7,111 per annum
So to compare this to the ISA, we need to see how many years the pension needs to pay out to reach the ฃ83,297 value of the ISA fund, allowing for growth on the ISA fund at the same 6%, net of charges.
The answer is 17 years for the basic rate payer and 30 years for the higher rate payer! Not only is this is a massive difference between the two, but it also helps towards the decision whether to invest into a pension tax wrapper or an ISA.
Other considerations
-We have ignored any "pension drawdown" option
-The amounts you can contribute to pensions is currently far more generous than that available to ISAs
-Annuity rates, income tax bracket, on pensions may improve or reduce in the future
-The government may change the rules on either pensions or ISAs or even abolish the tax favourability on one or both
-Financial Advisers/Salespeople are often paid higher initial commission on pensions than ISAs so make sure your adviser is taking these factors into account, and not just selling you a policy that pays him/her the highest commission.
So what did we advise James to do?
In his case it all came down to the picture painted by his cash flow model. This enabled us to see how James's wealth would look in the future.
What was clear was that his NHS Pension would in itself take James into the higher rate tax bracket, and that a tax free cash fund was more attractive to him than more income that would be taxed at 40%. It would also aid James to gift money to his 2 children, to both help them financially and reduce his likely Inheritance Tax liability.
Therefore, James invested monthly sums into an investment Maxi ISA.
The Financial Tips Bottom Line:
In effect, there is no clear cut right or wrong. It always comes back to balancing the pros and cons of all the options available and making your decision based on thorough research.
Ray Prince is an Independent Financial Planner with Rutherford Wilkinson plc, and helps doctors and dentists get the best deals on mortgages, protection and investments, as well as helping them achieve their financial objectives.
Get your free retirement planning guide, exclusively for UK Resident Doctors and Dentists. Just visit http://www.financialtipsonline.com/ea3. You'll also receive the twice-monthly email newsletter 'Financial Tips' that will enable you to keep posted of all financial issues affecting doctors and dentists. He can be contacted on 01670 505522.
Rutherford Wilkinson plc is authorised and regulated by the Financial Services Authority.
Monday, December 14, 2009
Investment via Annuities
Author: Joanne Elizabeth
Source: articleage.com
Of all the forms of income generating investments, annuities are some of the most controversial ones. Annuity - derived from the Latin word 'annus' - is basically an insurance product sold by insurance companies through authorised agents. This type of investment facilitates a series of payments in the future, in a defined manner, in exchange for an up-front payment of money.
There is a group of individuals who think that annuities are a waste of time and there are much better tools of investment such as stock market or property. But then again both the above forms of investment are vulnerable to crash and do not score very high in comparison to annuities, with respect to safety.
Annuities are commonly of two types first Deferred and the other Fixed. In the case of 'Deferred Annuity', the payments are made usually on a monthly basis for a number of years. This form of annuity makes sure that a younger person acquires a good income in his later years. In the latter form that is 'Fixed or Immediate Annuity', the purchaser pays a large capital sum usually to an insurance company and payments begin soon thereafter.
One of the biggest hurdles faced by annuities today is inflation. At the outset the agreed sum to be paid out by the insurance company might look excellent and very heart warming, but inflation can erode the value of your investment at an alarming rate.
Another draw back with annuities is that instead of being a long-term capital gain the earnings on annuities are taxable just as income is. Plus there are certain stringent rules and regulations governing the deposit that may not be customer friendly. One of which is that the customer cannot withdraw the money until he turns 59.5 years or else he would be charged a 10% penalty for withdrawing the same prematurely.
So why should you consider Annuities as a mode of investment?
Frankly any individual planning, income tax bracket, to invest in annuities should be the one who is not already contributing his maximum to other forms of retirement schemes. However, annuities are an excellent mode of investment for individuals in higher tax brackets. In those years of high tax liabilities, annuities make a lot of sense, as these savings are tax exempt. Tax is only due when income is received for the plan. That means you start drawing your annuity after you have stopped earning a high salary.
Webmaster
Investment via Annuities
Source: articleage.com
Of all the forms of income generating investments, annuities are some of the most controversial ones. Annuity - derived from the Latin word 'annus' - is basically an insurance product sold by insurance companies through authorised agents. This type of investment facilitates a series of payments in the future, in a defined manner, in exchange for an up-front payment of money.
There is a group of individuals who think that annuities are a waste of time and there are much better tools of investment such as stock market or property. But then again both the above forms of investment are vulnerable to crash and do not score very high in comparison to annuities, with respect to safety.
Annuities are commonly of two types first Deferred and the other Fixed. In the case of 'Deferred Annuity', the payments are made usually on a monthly basis for a number of years. This form of annuity makes sure that a younger person acquires a good income in his later years. In the latter form that is 'Fixed or Immediate Annuity', the purchaser pays a large capital sum usually to an insurance company and payments begin soon thereafter.
One of the biggest hurdles faced by annuities today is inflation. At the outset the agreed sum to be paid out by the insurance company might look excellent and very heart warming, but inflation can erode the value of your investment at an alarming rate.
Another draw back with annuities is that instead of being a long-term capital gain the earnings on annuities are taxable just as income is. Plus there are certain stringent rules and regulations governing the deposit that may not be customer friendly. One of which is that the customer cannot withdraw the money until he turns 59.5 years or else he would be charged a 10% penalty for withdrawing the same prematurely.
So why should you consider Annuities as a mode of investment?
Frankly any individual planning, income tax bracket, to invest in annuities should be the one who is not already contributing his maximum to other forms of retirement schemes. However, annuities are an excellent mode of investment for individuals in higher tax brackets. In those years of high tax liabilities, annuities make a lot of sense, as these savings are tax exempt. Tax is only due when income is received for the plan. That means you start drawing your annuity after you have stopped earning a high salary.
Webmaster
Investment via Annuities
Thursday, October 22, 2009
Your Dreams Capitalized - IRA Power
Author: Simone Nathan
Source: download
What are your dreams? What is your focus? You can not travel where you can not "see" the road.
Do you long for a beach condo? The chance to travel? A private cabin in the mountains?
Please allow yourself to keep dreaming and keep building - building your life around dreams you can see clearly and almost taste.
IRA building blocks can help fund your retirement dreams.
The Roth IRA: With this block you will pay taxes now and never pay again.
You contribute up to $5,000, or 100% of your earned income (whichever is less) annually, after taxes, and your investment earnings accumulate tax-free.*
Then you can:
Take contributions out, tax-free and penalty-free at any time. *
Take your earnings out, federal income tax-free* and penalty-free after five years and age 59ฝ.
There's no mandatory withdrawal, so your IRA can continue to compound after age 70ฝ.
After only five years in the account, up to $10,000 in earnings can be withdrawn penalty-free and tax-free for a qualified first home purchase.
Individuals over 70ฝ with earned income may continue to contribute annually.
You never have to "spend this account down", but if you do take it all you never pay any federal tax on the distributions.
*While many states have changed their income tax laws to conform to federal tax treatment of ROTH IRAs, some have not. Check with your tax advisor to ascertain whether the earnings on ROTH IRAs are subject to state income tax in your particular situation.
Consider the Roth IRA building block for your dreams if: You or your spouse work, whatever your age (even if you have a retirement plan at work) and you are:
• A single tax filer with adjusted gross income (AGI) of less than $110,000 or
• Joint tax filers with AGI of less than $160,000 or
• An unemployed spouse with joint AGI of less than $160,000 or
• You have a Traditional IRA you may want to convert- Please be aware that this is a taxable event.
The Traditional Deductible IRA: With this block you get a deduction now and you defer taxes until you withdraw from this IRA.
You contribute up to $5,000, or 100% of your earned income (whichever is less), annually and gain two tax benefits:
A deduction on your federal income taxes, if you qualify
Investment earnings accumulate tax-deferred until you withdraw.
Withdrawals prior to age 59ฝ may be subject to a 10% penalty tax.
You can withdraw contributions and earnings penalty-free for a first home purchase and higher education costs (subject to certain limits).
Consider the Traditional Deductible IRA building block for your dreams if:
You don't qualify for a Roth IRA and/or You or your spouse work and are under age 70ฝ, (even if you have a retirement plan at work, a partial deduction may be available to you.) or You have a short time horizon before you expect to be in a lower tax bracket when you retire and you are:
A single tax filer with AGI of less than $40,000 or
Joint tax filers with AGI of less than $60,000 or
An unemployed spouse or one who isn't in a retirement plan at work with joint AGI or less than $160,000
Not covered by a retirement plan at work.
The Traditional Nondeductible IRA can pay for your dreams with tax-deferred IRA dollars.
You can currently invest up to $5,000 annually and enjoy one of the few remaining opportunities to have your contribution grow tax-deferred.
You pay no taxes on your earnings until you withdraw your money.
You can withdraw earnings penalty-free for a first home purchase and higher education costs (subject to certain limits). Withdrawals prior to age 59ฝ may be subject to a 10% penalty tax.
Consider the Traditional Nondeductible IRA building block for your dreams if:
Your household income is higher than that allowed for the Roth, income tax bracket, or Traditional Deductible IRAs.
Participation in retirement plans at work and your household income keeps you from getting a deduction on an IRA
Today's Individual Retirement Account (IRA) choices give you the flexibility to build a program to help you meet your retirement dreams. This information is general in nature and should not be construed as tax or legal advice
Author of "Going for Gold after 50: An Illustrated Guide to High Probability Investing for The Plus Years". Discover how to put the investing odds greatly in your favor at http://www.goldafter50.com Personal, spiritual, financial, healthful life planning — http://www.dreamcatcherprogram.com.
Source: download
What are your dreams? What is your focus? You can not travel where you can not "see" the road.
Do you long for a beach condo? The chance to travel? A private cabin in the mountains?
Please allow yourself to keep dreaming and keep building - building your life around dreams you can see clearly and almost taste.
IRA building blocks can help fund your retirement dreams.
The Roth IRA: With this block you will pay taxes now and never pay again.
You contribute up to $5,000, or 100% of your earned income (whichever is less) annually, after taxes, and your investment earnings accumulate tax-free.*
Then you can:
Take contributions out, tax-free and penalty-free at any time. *
Take your earnings out, federal income tax-free* and penalty-free after five years and age 59ฝ.
There's no mandatory withdrawal, so your IRA can continue to compound after age 70ฝ.
After only five years in the account, up to $10,000 in earnings can be withdrawn penalty-free and tax-free for a qualified first home purchase.
Individuals over 70ฝ with earned income may continue to contribute annually.
You never have to "spend this account down", but if you do take it all you never pay any federal tax on the distributions.
*While many states have changed their income tax laws to conform to federal tax treatment of ROTH IRAs, some have not. Check with your tax advisor to ascertain whether the earnings on ROTH IRAs are subject to state income tax in your particular situation.
Consider the Roth IRA building block for your dreams if: You or your spouse work, whatever your age (even if you have a retirement plan at work) and you are:
• A single tax filer with adjusted gross income (AGI) of less than $110,000 or
• Joint tax filers with AGI of less than $160,000 or
• An unemployed spouse with joint AGI of less than $160,000 or
• You have a Traditional IRA you may want to convert- Please be aware that this is a taxable event.
The Traditional Deductible IRA: With this block you get a deduction now and you defer taxes until you withdraw from this IRA.
You contribute up to $5,000, or 100% of your earned income (whichever is less), annually and gain two tax benefits:
A deduction on your federal income taxes, if you qualify
Investment earnings accumulate tax-deferred until you withdraw.
Withdrawals prior to age 59ฝ may be subject to a 10% penalty tax.
You can withdraw contributions and earnings penalty-free for a first home purchase and higher education costs (subject to certain limits).
Consider the Traditional Deductible IRA building block for your dreams if:
You don't qualify for a Roth IRA and/or You or your spouse work and are under age 70ฝ, (even if you have a retirement plan at work, a partial deduction may be available to you.) or You have a short time horizon before you expect to be in a lower tax bracket when you retire and you are:
A single tax filer with AGI of less than $40,000 or
Joint tax filers with AGI of less than $60,000 or
An unemployed spouse or one who isn't in a retirement plan at work with joint AGI or less than $160,000
Not covered by a retirement plan at work.
The Traditional Nondeductible IRA can pay for your dreams with tax-deferred IRA dollars.
You can currently invest up to $5,000 annually and enjoy one of the few remaining opportunities to have your contribution grow tax-deferred.
You pay no taxes on your earnings until you withdraw your money.
You can withdraw earnings penalty-free for a first home purchase and higher education costs (subject to certain limits). Withdrawals prior to age 59ฝ may be subject to a 10% penalty tax.
Consider the Traditional Nondeductible IRA building block for your dreams if:
Your household income is higher than that allowed for the Roth, income tax bracket, or Traditional Deductible IRAs.
Participation in retirement plans at work and your household income keeps you from getting a deduction on an IRA
Today's Individual Retirement Account (IRA) choices give you the flexibility to build a program to help you meet your retirement dreams. This information is general in nature and should not be construed as tax or legal advice
Author of "Going for Gold after 50: An Illustrated Guide to High Probability Investing for The Plus Years". Discover how to put the investing odds greatly in your favor at http://www.goldafter50.com Personal, spiritual, financial, healthful life planning — http://www.dreamcatcherprogram.com.
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