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Robert A. Imparato, Jr CFP®
CERTIFIED FINANCIAL PLANNER™ professional
Craig A. Hyldahl CFP®
CERTIFIED FINANCIAL PLANNER™ professional
R.I.C.H. Planning Group, LLC
105 Fieldcrest Avenue, Suite #507
Edison, NJ 08837
Robert: 732-326-5240
Craig: 732-326-5240
Fax: 732-326-5331
Robert: robert@richplanninggroup.com
Craig: craig@richplanninggroup.com
Website: www.richplanninggroup.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.
GE 131926 (12/17)(Exp 12/19)
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Securities offered through Equitable Advisors, LLC (NY,NY (212) 314-4600), member FINRA,SIPC (Equitable Financial Advisors in MI & TN). Investment advisory products and services offered through Equitable Advisors, LLC, an SEC-registered investment advisor. Annuity and insurance products offered through Equitable Network, LLC, which conducts business in California as Equitable Network Insurance Agency of California, LLC; in Utah as Equitable Network Insurance Agency of Utah, LLC; and in PR as Equitable Network of Puerto Rico, Inc. Equitable Advisors and Equitable Network are affiliated companies and do not provide tax or legal advice.
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GE-4833845.1 (7/22)(Exp. 7/24)
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