Abri Advisors

Tax filing deadline is approaching - consider an IRA contribution

IRAs are one of the most powerful retirement savings tools

Photo of Abri Advisor Ariel Monsivais

Provided by:
Ariel Monsivais, Jr., CFP®,
Abri Advisors
located at Abri Credit Union

With the tax filing deadline approaching, have you considered contributing to an Individual Retirement Arrangement (IRA)? IRAs are one of the most powerful retirement savings tools available to you. Even if you're contributing to a workplace retirement plan, you may want to consider investing in an IRA. You may be eligible for a full or partial federal tax deduction with a traditional IRA. This can be especially valuable if you are already contributing the maximum to your workplace plan, such as 403(b) or 457(b). The good news is if you’re eligible for a tax deduction, there’s still time to make a contribution for the 2014 tax year. For 2014 and 2015, you can contribute up to $5,500 per year, and up to $6,500 if age 50 and over.1
There are two types of IRAs: traditional and Roth. The same annual contribution limit applies to both. While you can have both traditional and Roth IRAs, your total annual contribution to all IRAs that you own cannot be more than the annual limit established by the IRS. Earnings in both accounts grow tax-deferred, but there are significant differences between a traditional IRA and Roth IRA.
Traditional IRAs: For most, it’s a great way to help lower your taxable income. Almost anyone who earns taxable compensation can open a traditional IRA. Contributions may be tax-deductible as described above, but earnings and the tax-deductible amounts are taxed when withdrawn. You cannot make contributions after age 70 ½ and must begin annual distributions.1

Roth IRAs: Contributions are not tax-deductible. However, distributions of contributions and earnings are free from federal taxes after a five-year holding period if you also meet certain other requirements, such as being age 59 ½.1

Which to choose? A traditional IRA may be right for you if you want to reduce your yearly taxable income during your working years. Or, the Roth IRA might make more sense if you want to minimize taxes during retirement when you may be in a lower tax bracket. Ariel can help you determine which one is more beneficial for you, considering your individual circumstances. Keep in mind that your contribution must be made before the tax filing deadline, so contact Ariel today.
Have IRA Questions?
Ariel is here to help.
Email Ariel or Call (815) 409-4861
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
1 - irs.gov/publications/p590/ch01.html [2014]