1. Act Now.

Did you know you can contribute for 2020 until the tax filing deadline? That means you have until April 15^th to make your last contribution.

If you’re planning to contribute, get it done sooner rather than later. Avoid any last-minute problems and let your IRA grow faster.

2. Talk to Your Advisor About a Roth IRA Conversion.

If you have a traditional IRA, you can convert part of it to your Roth IRA.

Because tax laws are constantly changing, a conversion that didn’t make sense last year might do so in 2021.

While it might not be a great option for everyone, it is worth discussing with your tax specialist.

3. Know How to Move Your Money.

I can’t stress this enough. Know how to move your IRAs.

If you’re wanting to consolidate retirement accounts, make sure to roll over them to a like-titled account.

This will also avoid the 60-day and once-per-year rollover rule.

Do not accept a check in your name. Otherwise, you will owe taxes on that account immediately.

4. Update Your Beneficiary Designation.

Make sure your hard-earned money will be left to the right people. Family and friend dynamics change often.  Be sure to keep your beneficiary designation form up-to-date.

Recent changes like the SECURE Act could also impact your current beneficiary form. Spend some time making sure your wishes are accurately documented.

5. Use QCDs and Other IRA Tax Breaks.

IRA rules can be overwhelming, but make sure that’s not keeping you from options you might benefit from.

If you’re over 70 ½ and charitably inclined, you might consider a Qualified Charitable Distribution (QCD). First-time homebuyers might be able to use a portion of their IRA to help fund their down payment.

Take some time to learn what options you have available to you.

6. Plan for the Unexpected.

Our tax laws and IRA rules are constantly changing. I think we should expect more change in 2021 than in previous years.

Remember, IRS guidance on recent rule changes and a new administration and Congress could have a big impact on your IRA.

The bottom line? Plan ahead and work closely with a fiduciary professional who will seek out the best solutions to fit your situation.

The post How Can I Ramp Up My IRA in 2021? appeared first on AWM.

Contributing to your IRA by April 15^th could lower your tax bill for 2019.

The annual contribution limits for IRAs (both traditional and Roth) for 2019 is $6,000 for any working individual under the age of 50. Those over the age of 50 can contribute up to $7,000 each year.

These contributions might lower your taxable income if you have earned an income. Here are a couple examples:

Let’s assume you are single and earn an adjusted gross income (AGI) of $60,000. If you contribute the maximum of $6,000, you will only pay taxes on $54,000 of your income.

If you’re married, filing jointly and have an AGI of $98,000, you can both contribute up to $12,000 ($6,000 each) for 2019. You will pay taxes on $86,000, assuming you make the maximum contributions allowed under the law.

Traditional IRA contributions are non-itemized deductions, which means you can claim them on your return.

However, there are limits for who can deduct their IRA contributions based on a few different factors:

1. If you make too much income, you might still be able to contribute to your IRA, but might be limited or disallowed deductions.
2. If you’re married and not covered by a retirement plan, your AGI limits are higher. It’s always good to check with your financial advisor or accountant for clarification on these limits.

For more information, you can visit irs.gov. I encourage you to speak with a fiduciary financial advisor and your tax specialist. They can help you maximize the deductions you qualify for and make the most of your tax returns for 2019.

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The post Contributing to Your IRA by April 15 Could Lower Your 2019 Tax Bill appeared first on AWM.

Can you relate?

It’s not easy to make financial resolutions, but with the right plan, Donna (and you) can rest easy about the future.

1. Up Your Retirement Contributions
   

   In 2020, Donna can contribute more than ever to her retirement accounts. Because she’s still working, Donna can stock away $19,500. If you are expecting a raise, bonus, or can sock away a little extra, consider upping your contributions this year. Donna knows, even the smallest increase can have a large impact down the road.

    

2. Make Catch-Up 401(k) Contributions
   

   Since Donna is over 50, she can play “catch-up” with her retirement savings. This means she can contribute an extra $6,500 to her 401(k), maxing out at $26,000 in 2020. If your birthday falls anytime in 2020, you can start making these contributions as early as January 1, 2020. Think of it as a birthday present to yourself 😉

    

3. Max Out Your IRA Contributions

   As long as Donna or her husband are earning income, she can put $6,000 into a traditional or Roth IRA, assuming she meets the income threshold. Donna can contribute up to $7,000 since she’s over 50. Certain situations allow for backdoor Roth contributions if you can’t deduct your IRA contributions.

    

4. Start A Health Savings Account (HSA)

   Did you know HSAs have triple tax-free benefits? Donna can take tax deductions when funding the plan, her money will grow tax-free, and it’s not taxed on withdrawals when used for health care expenses after the age of 65. You can contribute $3,550 as a single or $7,100 as a family.

    

5. Design a Comprehensive Financial Plan 

   Donna has real, tangible ways she can work to prepare for her future, but she’s not done yet. She wants to meet with her financial planner and make sure she’s on track to meet her retirement goals. The ups and downs of the market are so much easier to follow when you have a solid plan to follow.

With the right planning and professional help, Donna can take advantage of various retirement plans and stow away a substantial amount each year for her future. Sounds like a pretty good New Year’s Resolution to me.

Talk to your financial advisor or accountant. Let’s make 2020 the best year yet!

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The post How can I make meaningful resolutions that will help my family? appeared first on AWM.

1. File now and fund later

   People are always asking me if an IRA contribution has to be made before their tax return is filed. What’s surprising is, the answer is no. You can claim the deduction for your IRA contribution now, and fund it later after your taxes are filed. Some people are able to fund their IRA contribution with their tax return if the timing is just right. Just a word of advice, don’t wait too long. If you claim the contribution, make sure you get it done quickly.

2. Tax credits are available

   Most people haven’t heard of the Saver’s Credit. It’s a tax credit available to lower-income workers who contribute to their IRA. This is basically a double tax break because it’s available in addition to any other deductions you may have already claimed. The maximum contribution limit is $2,000 and you can claim up to 50% credit towards that amount. You could be able to reduce your tax liability up to $1,000.

3. Spousal contributions can help stay-at-home spouses

   If you are a stay-at-home spouse, it doesn’t necessarily mean you can’t make IRA contributions. If your spouse is earning taxable income, you can make spousal contributions to your IRA based on their taxable compensation. It is more than possible to build up your retirement savings as a stay-at-home spouse.

4. No age limits for Roth IRA contributions

   You might think you’re too old to contribute to an IRA, but that might not be the case. While you’re no longer allowed to contribute to a tradition IRA once you reach age 70 ½, contributing to a Roth IRA might still be an option. There are no age limits for Roth IRA contributions, so anyone can make these contributions. This might be the perfect solution for retirees who work part-time, but don’t need the extra income. So, why not put that money towards your future?

5. No extensions for IRA contributions

   Some people can take extra time to file their taxes, but this won’t affect the IRA contribution deadline. For 2018 traditional or Roth IRA contributions, the deadline is April 15, 2019. Even a partial contribution can help to lower your tax bill, so take advantage of this additional tax break.

These 5 rules might be exciting to read about, but I would encourage you to work with your fiduciary financial advisor or tax professional before making any big decisions. They can help you optimize your returns, contributions, and make your money work for you. Our goal is to help our clients to live a purposeful life in a complex world.

If you don’t know where to start, I would love to help. Give us a call.

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The post 5 IRA Contribution Rules that Might Surprise You appeared first on AWM.

Traditional IRA contributions increased by $500, now totaling $6,000 for anyone under 50. If you are turning 50 or older this year, you can contribute up to $7,000 to your IRA.

1.    IRS Increases IRA Limit

This is the first increase to the annual contribution limit since 2013. For the past five years, anyone under the age of 50 was able to contribute a maximum of $5,500, or $6,500 for those 50 and older. IRA contribution limits are adjusted periodically to keep up with the cost of living. These contributions are only increased in $500 increments, so they don’t necessarily increase each year we experience inflation.

2.    Rules to Remember

A word of caution as you plan out your contributions for the year: not everyone is eligible to contribute the full amount. Here are some rules to remember:

• IRA contribution limits are per-person, not per-account
• You can make IRA contributions anytime during the calendar year, or in the following calendar year up to the regular tax deadline (April 15).
• You must be earning an income
• Taxable income might not be considered earned income (i.e. social security/investment income)
• Anyone 70 ½ or older cannot make traditional IRA contributions. However, if you are still working and your employer offers a 401(k), you might be able to participate in the plan. Talk to a fiduciary advisor to see if you are eligible.
• You might make too much money to contribute to a traditional IRA
• You might have limits on your deductions for traditional IRA contributions

Also, keep in mind that the higher limit applies to contributions made for 2019, not necessarily all contributions made in 2019. If you are planning to make a 2018 contribution in 2019, you will be limited to the 2018 amount of $5,500 ($6,500 if you are over 50).

3.    Other Limits Increased

The IRA raised limits on other retirement accounts as well. Salary deferrals into 401(k) plans have increased to $19,000 and $25,000 if you are 50 or older. Other increased limits include the eligibility to make a Roth IRA contributions and limits for deductibility of traditional IRA contributions for active participants. For more information on the new 2019 limit changes, visit the IRS website.

I encourage you to seek out professional advice when planning out your annual contributions. A fiduciary financial advisor can help you maximize your contributions and answer any question along the way. Strategically placing your retirement savings is vital to your future and we would love to help guide you on your journey.

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