Here’s a last minute IRA tip that can help you stay on track for a comfortable retirement:
Many divorced people who are receiving alimony neglect to fund their IRAs every year.
That’s a mistake, because putting money aside each year into your Traditional or Roth IRA can help you keep your retirement savings on target, and ensure a comfortable lifestyle even after your alimony stops.
The IRS considers alimony as “earned income.” So if you receive alimony, and are otherwise eligible, you can contribute to a Traditional or Roth IRA, even if you have no other working income.
Which type of IRA is best? A traditional IRA can reduce your taxes right away. A Roth IRA gives you more tax-free income down the road. Ask your tax preparer or financial planner which is best for you.