Three Keys to Remember for IRAs

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Three Keys to Remember for IRAs

Stephen Hofmann, J.D., CPA, Assistant Vice President, Wealth Advisor & Investment Officer

It’s that time of the year – we all have taxes on the brain. Whether you’ve yet to file, or if you’ve already filed and are looking to get this next year started off on the right foot, we’ve got some key reminders regarding taxes and IRAs.

    1. It’s time to save with a Traditional IRA. Depending on your age, you may still have time to contribute to an Individual Retirement Account (IRA). The Internal Revenue Service (IRS) imposes deadlines on when contributions can be made to traditional IRAs. If you have not filed your tax return, and would still like to make a 2015 contribution, you still have time. For 2015 contributions, you have up until the filing of your 2015 income tax return or April 18, 2016.
    2. There are current tax benefits with a Traditional IRA. At $5,500 ($6,500 age 50 and older), the annual limits to an IRA may seem small, but combined with tax breaks and compounding, your savings can add up significantly over time. Depending on your income, you may receive a current tax deduction for the amount of your annual contribution. The size of that tax deduction depends on the tax bracket you are in for 2015. In other words, the traditional IRA can have a double benefit, by saving for retirement and providing a current income tax deduction.
    3. Don’t forget about the Roth. The annual contribution limits to a Roth IRA are the same as a Traditional IRA. However there is no current income tax benefit for contributing. Under current IRS rules, the assets in a Roth IRA will grow income tax free. When you make qualified distributions from a Roth, those distributions are not taxable (traditional IRA distributions are treated as taxable ordinary income). With patience, the tax free benefit of a Roth IRA can be a strong planning tool for your retirement. The Roth does have income contribution limitations, but if a taxpayer is eligible to contribute, the taxpayer can reap large future benefits.

Alpine Trust & Investment Group offers several different calculators to help you begin your planning. These tools are an excellent place to start, providing an opportunity to identify your desired course of action. Meeting with a wealth advisor or retirement planning specialist will help you put that plan in place. Please feel free to reach out to one of our many talented advisors here at Alpine Trust & Investment Group. Stephen Hofmann, J.D., CPA, is an Assistant Vice President, Wealth Advisor & Investment Officer at Alpine Trust & Investment Group. He has more than 7 years of experience in managing assets, tax planning and financial planning. 

*This does not constitute tax planning services. The above statements do not include all IRS rules that may impact the contributions and tax benefits. To confirm what options are available to you, please contact one of our wealth advisors or retirement planning specialists. Investment and insurance products are: not FDIC insured; not guaranteed; and, may be subject to investment risk, including possible loss of principal.

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