It’s been over a month since we’ve rung in the New Year. Whether or not you’ve been successful in sticking with your 2017 resolutions, it’s not too late to take advantage of the tax benefits offered by an Individual Retirement Account (IRA), while also saving for retirement.
If you have not yet funded an IRA for the 2016 tax year, there is still time to contribute. The deadline is either the day you file your taxes (not including extensions) or the tax filing deadline (April 18,2017), whichever comes first. There are different types of IRAs that can help you reach your retirement savings goals, including:
For many people, a traditional IRA, which is a tax-deferred retirement savings account, is an excellent way to maximize their savings and invest for retirement. Even if you or your spouse participate in an employer-sponsored retirement savings plan, you can contribute to an IRA; however, you may not be able to fully deduct your contributions.
A Roth IRA is appropriate for those who meet the income requirements and can provide a tax-free stream of income in retirement. Roth IRA contributions are not tax-deductible, but if you satisfy specific requirements in retirement, your qualified distributions will be tax free.
Business owners and those who are self-employed can take advantage of a Simplified Employee Pension (SEP) IRA, in which employers make a tax-deductible contribution for themselves and eligible employees. SEPs are confined to employer contributions and contributions must be a uniform percentage of compensation for all employees.
This type of IRA is appropriate for a married couple filing jointly, in which one spouse does not have earned income, and the other earns more than the maximum allowable IRA contributions for both. A Spousal IRA enables the non-earning spouse to have the tax benefits offered by IRAs, and adds to the combined retirement savings of a married couple.
Klingenstein Fields Advisors welcomes the opportunity to meet with you and help you navigate the complexities of IRA rules, and select the retirement savings options that are right for your unique circumstances.