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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
March/April 2020
When Tradition Matters
If you’re still looking for a tax deduction on your 2019 tax return, you might find one by contributing to a traditional IRA. This action has a double benefit because you’ll put money away for your future, too. Here’s a look at the traditional IRA, to which you can make tax-deferred contributions for tax year 2019 up to your tax-filing deadline if you qualify by income.
How Much?
While Roth IRAs get all the headlines with their tax-free distributions, traditional IRAs still occupy a large space in the retirement savings arena. Here’s why: Like potential growth in a Roth IRA, a traditional IRA’s growth builds tax-deferred. Unlike a Roth IRA, its traditional cousin has taxable distributions.* And also unlike a Roth, the traditional IRA offers tax-deductible contributions for those people qualifying by income.Tax-deductible contributions help you later, because your account should grow over time, and now, because contributions may be deductible from your taxable income in the tax year contributions are made. So, if you are in the 25% combined tax bracket (state and federal), this means a $5,000 annual contribution saves you $1,250 in taxes.
Who Qualifies?
Your income and tax filing status will determine if your contributions are tax-deductible in tax year 2019. If you are covered by a retirement plan at work and your tax filing status is single or head of household, you can make a tax-deductible contribution for 2019 of up to the limit of $6,000 if your modified adjusted gross income (MAGI) is $64,000 or less. Take a partial deduction if your MAGI is between $64,000 and $74,000.If you file jointly or are a qualified widower, the income limit for a full deduction is $103,000 or less. For a partial deduction, it’s between $103,000 and $123,000. Married taxpayers filing jointly have no income limits to qualify for tax-deductible contributions when neither has a workplace retirement plan. If your spouse has a workplace plan and you don’t, take a full deduction if your MAGI is $193,000 or less and a partial deduction between $193,000 and $203,000.
* Distributions from traditional IRAs and, if taken prior to reaching age 59 1/2, may be subject to an additional 10% IRS tax penalty.
https://www.irs.gov/retirement-plans/2019-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-are-covered-by-a-retirement-plan-at-work and https://www.irs.gov/retirement-plans/2019-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-are-not-covered-by-a-retirement-plan-at-work
GE-2763334(10/19)(exp.10/21)
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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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