Mari Adam talked to Kiplinger Personal Finance magazine to share insights about IRA limits and strategies. You can read the entire article here.
The maximum amount you can contribute to your IRA for 2020 is $6,000 or 100% of earned income ($7,000 if you turned 50 by the end of last year).
Your IRA may be deductible depending on your income levels and whether you or a spouse are covered by a workplace retirement plan. The rules can be complex, so please call us before the deadline to review your situation.
A deductible IRA can help you reduce your tax bill and also build up your retirement nest egg.
Traditional IRAs are best for people who need an immediate tax deduction or want to defer income in the hopes that their bracket will be lower in the future, Mari told Kiplinger in the article. That may include people expecting to retire shortly and those who believe their income will go down in future years.
On the other hand, a Roth IRA may be best for a younger saver who doesn’t need the immediate tax deduction as much, but can benefit from decades of tax-free growth. In fact, Roth IRAs are ideal for long-term savers currently in a lower tax bracket.
Here’s a key fact about IRAs you may not know. If your income is below certain levels, you can participate in a savings plan at work – like a 401(k) – and still deduct your IRA.
And here’s another little known strategy. Even if you’re a stay-at-home spouse, you may be able to fund your IRA as long as your spouse works and other conditions are met.
The Takeaway: Give us a call. We’re happy to discuss the options with you. Just remember that the April 15 contribution deadline is hard and fast. There are no extensions when it comes to IRA contributions, so call us as soon as possible to explore this use-it-or-lose-it retirement savings opportunity!