An ideal way to save towards your retirement is through getting a Roth IRA (Individual Retirement Account) or a 401K Plan used by both large and small businesses. Once you have set up your IRA then you can start making payments into it. But there are certain items that you should be aware of.
Firstly how much a person is able to contribute depends on their age. Anyone under the age of 50 can contribute $4,000 while those over 50 are entitled to contribute $4,500. There are no limitations on the age at which people are able to contribute to their Roth IRA plan. But 401k contribution limits vary considerably from those offered to you with an IRA.
For you to be able to contribute to your Roth IRA you need to have an income which is taxable and at any one time your adjusted gross income should be less than $110,000 for an individual or $160,000 for a couple who file joint returns. However, for couples who file their own separate returns this figure goes down to $100,000.
If you are contributing towards a traditional IRA, the Roth IRA contributions you are allowed to make at no time can exceed the amount of contributions you are entitled to make in any given year. Also if your income exceeds a certain amount then the contributions you make to your Roth IRA can be further reduced.
If you want to be able to contribute into a Roth IRA account as well as a traditional one then it is worth considering using the conversion method to do so. What you do is withdraw funds from your traditional IRA and as soon as they become available. You then have 60 days to place these funds into your Roth IRA.
You are not restricted to when you can make contributions to an IRA. But you must make sure that these contributions are made before you file your tax return even if you have been provided with an extension. Because IRA contributions are not tax deductible these should not be listed on a tax return.
If you are looking for a retirement where you are financially secure it is worth investigating a little more how important having an IRA is. As part of your retirement planning you need to consider the pros and cons carefully of getting an IRA.
Above we have given some details relating to making IRA contributions. It is also a good idea to discuss the issue with your financial adviser or accountant as they may be able to recommend an IRA that they feel a suitable investment for you. Which should then help to make sure that your retirement is a much happier one in the future.
Firstly how much a person is able to contribute depends on their age. Anyone under the age of 50 can contribute $4,000 while those over 50 are entitled to contribute $4,500. There are no limitations on the age at which people are able to contribute to their Roth IRA plan. But 401k contribution limits vary considerably from those offered to you with an IRA.
For you to be able to contribute to your Roth IRA you need to have an income which is taxable and at any one time your adjusted gross income should be less than $110,000 for an individual or $160,000 for a couple who file joint returns. However, for couples who file their own separate returns this figure goes down to $100,000.
If you are contributing towards a traditional IRA, the Roth IRA contributions you are allowed to make at no time can exceed the amount of contributions you are entitled to make in any given year. Also if your income exceeds a certain amount then the contributions you make to your Roth IRA can be further reduced.
If you want to be able to contribute into a Roth IRA account as well as a traditional one then it is worth considering using the conversion method to do so. What you do is withdraw funds from your traditional IRA and as soon as they become available. You then have 60 days to place these funds into your Roth IRA.
You are not restricted to when you can make contributions to an IRA. But you must make sure that these contributions are made before you file your tax return even if you have been provided with an extension. Because IRA contributions are not tax deductible these should not be listed on a tax return.
If you are looking for a retirement where you are financially secure it is worth investigating a little more how important having an IRA is. As part of your retirement planning you need to consider the pros and cons carefully of getting an IRA.
Above we have given some details relating to making IRA contributions. It is also a good idea to discuss the issue with your financial adviser or accountant as they may be able to recommend an IRA that they feel a suitable investment for you. Which should then help to make sure that your retirement is a much happier one in the future.
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Have you started saving for your retirement yet? Are you making IRA contributions or in a 401k? For great information on retirement savings plans visit http://www.iracontributionsez.com.
