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Tom Meaglia, ChFC®, AEP®,
CLU®, CRPC®, MSFS
Chartered Financial Consultant
Investment Advisor Representative
Chartered Retirement Planning Counselor
CA Insurance Lic. #0567507
Meaglia Financial Consulting
2105 Foothill Blvd., #B140, La Verne, CA 91750
Toll Free: 800-386-3700
Bus: 909-593-6105
Cell: 818-681-8600
Fax: 909-593-6120
Email: tom@meagliafinancialconsulting.com
Website: www.meagliafinancialconsulting.com
May/June 2018
Weight Your IRA Options
Choosing the type of IRA you want can be a daunting task. While both have tax advantages of one type or another, traditional and Roth IRAs are generally polar opposites. Here’s a look at both types of IRAs and what they can do for your retirement savings efforts in 2018. Eligibility
Anyone can contribute to a traditional IRA, but contributions are not tax-deferred if you exceed income limits. For single taxpayers covered by a workplace retirement plan, the phase-out range is $63,000 to $73,000 in 2018.
Married couples filing jointly have a phase-out range from $101,000 to $121,000 when the spouse making the traditional IRA contribution is covered by a workplace retirement plan. If you’re not covered by a workplace retirement plan and are married to someone who is, the phase-out is between $189,000 and $199,000.
High-income taxpayers are not eligible to contribute to a Roth IRA. Eligibility to make contributions in 2018 is phased out if annual income is from $120,000 to $135,000 for singles and heads of household. The income phase-out range for couples filing jointly is $189,000 to $199,000.
Contributions
If you contribute to a 401(k) plan or a traditional IRA, you are probably familiar with tax-deferred contributions. They are deducted from your gross pay before taxes are calculated, so your taxable income is reduced. Contributions to a Roth IRA are not deductible.
Tax-Deferral
Here’s one area where Roth and traditional IRAs are the same. Both IRAs feature potential earnings growth that are tax-deferred.
Distributions
Qualified Roth IRA distributions are tax-free after age 59 1/2 if you have owned the IRA at least five years. Distributions from traditional IRAs are subject to ordinary income taxes. Also be aware that distributions taken before age 59 1/2 are subject to an additional 10% tax penalty, with few exceptions.
Contribution Limits
The annual contribution limit for both types of IRAs is $5,500 in 2018, plus another $1,000 if you’re at least age 50. The limit is for either IRA, or for combined contributions to both.
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Investment advisory services are offered through Fusion Capital Management, an SEC Registered Investment Advisor. The firm only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration is not an endorsement of the firm by the commission and does not mean that the advisor has attained a specific level of skill or ability. All investment strategies have the potential for profit or loss.
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