Now is the Time to Fund Your IRA
With the recent pullback in the markets this is an attractive time to buy investments. If you haven’t already funded your retirement account for 2019, consider doing so by April 15, 2020. That is the deadline for contributions to a traditional IRA (deductible or not) and Roth IRA.
If you qualify to make a deductible contribution, this will help you lower your tax bill for 2019. Contributions will compound tax deferred. To qualify for the full annual IRA deduction in 2019, you must either: 1) not be eligible to participate in a company retirement plan, or 2) if you are eligible, you must have adjusted gross income of $65,000 or less for singles, or $104,000 or less for married couples filing jointly. If you are not eligible for a company plan but your spouse is, your traditional IRA contribution is fully-deductible if your combined gross income does not exceed $196,000. For 2019, the maximum IRA contribution you can make is $6,000 ($7,000 if you are age 50 or older by the end of the year).
Although choosing to contribute to a Roth IRA instead of a traditional IRA will not reduce your 2019 tax bill (Roth contributions are not deductible), it could be the better choice because all withdrawals from a Roth can be tax-free in retirement. Withdrawals from a traditional IRA are fully taxable in retirement. To contribute the full $6,000 ($7,000 if you are age 50 or older by the end of 2019) to a Roth IRA, you must earn $124,000 or less a year if you are single or $196,000 if you’re married and file a joint return.
The amount you save on taxes from contributing will vary. Over time, future contributions could save you thousands, depending on your contribution, income tax bracket, and the number of years you keep the money invested. If you have any questions on retirement contributions, please call us at 541-574-6464 or email us at firstname.lastname@example.org, we are happy to answer any questions.
Julia Carlson is a registered Principal with, and securities are offered through, LPL Financial. Member FINRA/SIPC. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
Information in this material is for general information only and not intended as investment, tax or legal advice. Please consult the appropriate professionals for specific information regarding your individual situation prior to making any financial decision.
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