Bucks Writs - Spring 2019 - 22

feature 

Roth IRAs A Tool to
Maximize Tax Efficiency
By Michael L. Schwartz, RFC, CWS, CFS
PAYING TAXES IS SO ENGRAINED IN OUR LIVES
THAT MANY PEOPLE DO NOT EVEN THINK ABOUT
TAX REDUCTION UNTIL IT'S TIME TO FILE THEIR TAX
RETURNS. Unfortunately, by that point it's usually too late
to implement a strategy for minimizing their tax bill.

distribution, provided you hold the account for 5 years and
meet one of the following conditions: you are age 59½
or older; are disabled; make a qualified first-time home
purchase (lifetime limit $10,000); or have died. Also, be
aware that while your earnings may be subject to taxes and
penalties if withdrawn before those conditions are met,
your contributions can be withdrawn at any time without
tax or penalty. Roth IRAs have no required minimum distributions (RMDs) during the lifetime of the original owner so
they can also be useful vehicles for estate planning.

It's extremely important that you take your tax efficiency
into your own hands. The concept of "let's deal with
taxes when the time comes," many times is usually not
the best plan. One of the biggest tax benefits available
to most investors is the ability to defer taxes offered by
retirement savings accounts, such as 401(k)s, 403(b)s and
IRAs. Through the use of tax deferrals, investors have the
opportunity to grow their wealth faster.

Most experts agree that consistent funding of a
retirement plan is a healthy activity. The chart in this
article shows the 2018 IRS income limits for those who
contribute to Roth IRAs.

Traditional retirement accounts can offer a potential double
dose of tax advantages. For those who qualify, contributions
made may reduce current taxable income (when income
eligibility requirements are met) and any investment growth
is tax-deferred. After age 70½, however, there are required
minimum distributions (RMDs) that you must take. Also,
upon death, your beneficiaries will be required to pay taxes.

Considering Roth IRA Conversions
Prior to 2010, to be able to convert from a traditional IRA
to a Roth IRA, your income needed to be under a certain
limit. The IRS rules have changed and there is no longer
an income cap for Roth IRA conversions. With the cap
removed, regardless of your income, anyone can now
convert to a Roth IRA, as long as they pay the appropriate
tax on the conversion. If you convert to a Roth IRA, you
will have to pay taxes on any tax-deferred deposits and
investment gains at the time of the conversion.

Roth IRAs are different. With a Roth IRA (if income eligibility
requirements are met) you can only contribute after-tax
dollars. A Roth IRA contribution won't reduce your taxable
income the year you make it, however, there are no taxes
on your future earnings and no penalties when you take a

ROTH IRA 2019
Roth IRA Contribution Limit

$6,000
($7,000 if over 50)

Roth IRA Income Limits for single filers

Phase-out starts
at $122,000;
ineligible at $136,999

Roth IRA Income Limits - for Phase-out starts
married filing jointly and
at $193,000;
qualifying widow(er) filers
ineligible at $202,999

22



Bucks Writs - Spring 2019

Table of Contents for the Digital Edition of Bucks Writs - Spring 2019

Bucks Writs - Spring 2019 - 1
Bucks Writs - Spring 2019 - 2
Bucks Writs - Spring 2019 - 3
Bucks Writs - Spring 2019 - 4
Bucks Writs - Spring 2019 - 5
Bucks Writs - Spring 2019 - 6
Bucks Writs - Spring 2019 - 7
Bucks Writs - Spring 2019 - 8
Bucks Writs - Spring 2019 - 9
Bucks Writs - Spring 2019 - 10
Bucks Writs - Spring 2019 - 11
Bucks Writs - Spring 2019 - 12
Bucks Writs - Spring 2019 - 13
Bucks Writs - Spring 2019 - 14
Bucks Writs - Spring 2019 - 15
Bucks Writs - Spring 2019 - 16
Bucks Writs - Spring 2019 - 17
Bucks Writs - Spring 2019 - 18
Bucks Writs - Spring 2019 - 19
Bucks Writs - Spring 2019 - 20
Bucks Writs - Spring 2019 - 21
Bucks Writs - Spring 2019 - 22
Bucks Writs - Spring 2019 - 23
Bucks Writs - Spring 2019 - 24
Bucks Writs - Spring 2019 - 25
Bucks Writs - Spring 2019 - 26
Bucks Writs - Spring 2019 - 27
Bucks Writs - Spring 2019 - 28
Bucks Writs - Spring 2019 - 29
Bucks Writs - Spring 2019 - 30
Bucks Writs - Spring 2019 - 31
Bucks Writs - Spring 2019 - 32
https://www.nxtbook.com/hoffmann/BucksWrits/Fall2021
https://www.nxtbook.com/hoffmann/BucksWrits/Summer2021
https://www.nxtbook.com/hoffmann/BucksWrits/Spring2021
https://www.nxtbook.com/hoffmann/BucksWrits/Fall2020
https://www.nxtbook.com/hoffmann/BucksWrits/Summer2020
https://www.nxtbook.com/hoffmann/BucksWrits/BucksWritsSpring2020
https://www.nxtbook.com/hoffmann/BucksWrits/Winter2020
https://www.nxtbook.com/hoffmann/BucksWrits/Fall2019
https://www.nxtbook.com/hoffmann/BucksWrits/Summer2019
https://www.nxtbook.com/hoffmann/BucksWrits/Spring2019
https://www.nxtbook.com/hoffmann/BucksWrits/Winter2019
https://www.nxtbook.com/hoffmann/BucksWrits/Fall2018
https://www.nxtbook.com/hoffmann/BucksWrits/Summer2018
https://www.nxtbook.com/hoffmann/BucksWrits/Spring2018
https://www.nxtbook.com/hoffmann/BucksWrits/Winter2018
https://www.nxtbook.com/hoffmann/BucksWrits/Fall2017
https://www.nxtbook.com/hoffmann/BucksWrits/Summer2017
https://www.nxtbook.com/hoffmann/BucksWrits/Spring2017
https://www.nxtbookmedia.com