Michael A. Milazzo, CLU, ChFC

Registered Principal


The Meridian Financial Company

90 Lawrence Avenue, Suite 4, Smithtown, NY 11787


Phone:  631-979-4223

Fax: 631-656-8199 


Email: meridian@ae.cadaretgrant.com

Website: www.merfinco.com

May/June 2018

Weight Your IRA Options

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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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Michael A. Milazzo is a Registered Representative of and offers securities through Cadaret, Grant & Co, Inc, a member of FINRA and SIPC. The Meridian Financial Company and Cadaret, Grant are separate entities. I am registered to sell Securities in the following States: NY, PA, NC, FL, CO, ID.
The Meridian Financial Company and LTM Client Marketing, Inc. are unrelated companies. This publication was prepared for the publication’s provider by LTM Client Marketing, an unrelated third party. Articles are not written or produced by the named representative.

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