For your future
There are some important questions when it comes to retirement planning: How much income will you need in retirement? Should you invest in a traditional or Roth IRA? What is the contribution limit for your IRA? Your certified financial advisor at The Resource Center in Springfield MO or Branson MO will help you sort through these and other important financial planning factors to help you choose the IRA that’s best for your needs and your goals. Our local financial advisor offers customized retirement savings plans that are tax-efficient and help provide the lifestyle that fits your goals throughout retirement. Plus, we will help you make appropriate adjustments as your needs change over time.
Traditional IRA vs. Roth IRA
In a traditional IRA, contributions may be tax deductible and typically your earnings grow tax-deferred. You will be penalized for withdrawing money before age 59½, with some exceptions.
Contributions to a Roth IRA are not tax-deductible, but your earnings grow tax-free. As long as you meet the Roth IRA rules and you are 59½ or older, you can access tax-free money when you retire.
You can transfer a traditional IRA into a Roth IRA and pay the tax in a single year. When tax rates go down, this can be a good option for someone who has a larger traditional IRA. Our advisor can talk you through the Roth IRA conversion rules, withdrawal rules, and more.
Please remember that converting an employer plan account to a Roth IRA is a taxable event. Increased taxable income from the Roth IRA conversion may have several consequences including (but not limited to) a need for additional tax withholding or estimated tax payments, the loss of certain tax deductions and credits, higher taxes on Social Security benefits, and higher Medicare premiums. Be sure to consult with a qualified tax professional before making any decisions regarding your IRA.
It is generally preferable that you have funds to pay the taxes due upon conversion from funds outside of your IRA. If you elect to take a distribution from your IRA to pay the conversion taxes, please keep in mind the potential consequences, such as an assessment of product surrender charges or additional IRS penalties for premature distributions.
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