Mar 08

Roth IRAs: The Antidote to Higher Taxes?

By James Christy, Wealth Advisor

Who enjoys paying taxes? With federal income tax rates possibly going up in the near future, the case for opening and contributing to a Roth IRA account, if eligible, becomes even more compelling. Roth IRAs are considered tax-advantaged because earnings within them are tax-free if withdrawals are made after age 59 1/2 and the account has been held for five or more years. The deadline for making Roth IRA contributions for tax year 2020 is April 15, 2021. This is true even if you have received IRS approval for an extension of the filing of your 2020 federal income tax return. The maximum contribution for 2020 is $6,000, unless you are age 50 or over, in which case the maximum permissible contribution is $7,000.

Please remember that there is no longer an age limit for making a Roth IRA contribution. Prior to 2020, individuals could not make such a contribution once they turned age 70 1/2, but Congress in 2019 repealed the age limit for tax years 2020 and later. 

There remain income limitations governing who is eligible to contribute, however. Single taxpayers must have modified adjusted gross income (MAGI) under $139,000 for tax year 2020, and under $140,000 for tax year 2021 to contribute to a Roth IRA. Married taxpayers filing jointly are permitted to make a contribution if their combined MAGI is under $206,000 for tax year 2020 and $208,000 for tax year 2021.

The rules governing contributions to IRAs can be complicated. Please give us a call if we can walk you through your individual situation to determine your eligibility.

This information is not intended to be a substitute for specific, individualized tax advice. We suggest you discuss specific tax issues with a qualified tax advisor.
Author
Jim Christy, Wealth Manager

James Christy, J.D.

Wealth Advisor

Recent Articles

Nov 04

Why Attempting To “Time the Market” is a Difficult Strategy

By Nikki Young, CFP®,  Financial Advisor

Market timing is an investment strategy in which investors move in and out of the markets to try to avoid losses before they happen and then buy back in at the bottom after the market has crashed. Buying low or selling high is a prudent strategy for most investors. However, buying lowest or selling highest — or trying to time the market perfectly — is an elusive strategy, one that is difficult to execute and may lead to lower returns and missed opportunities.

Nov 04

Old Annuity – Gold Mine or Money Pit?

By Todd Holden, Financial Advisor

Annuities are contracts between the annuity owner and an insurance company — nothing more, nothing less. Like any contract, they have terms. Sometimes, these terms turn out to favor the annuity owner, and a smart owner can use these terms to their advantage. Other times the contract terms favor the company, and the annuity owner should get out of the contract as quickly as possible. Below is an example of both:

 

Gold Mine