pension plan

Tax

It’s Not Too Late to Make a 2012 IRA Contribution

If you haven’t contributed funds to an Individual Retirement Arrangement for tax year 2012, or if you’ve put in less than the maximum allowed, you still have time to do so. You can contribute to either a traditional or Roth IRA until the April 15 due date for filing your tax return for 2012, not including extensions.

Be sure to tell the IRA trustee that the contribution is for 2012. Otherwise, the trustee may report the contribution as being for 2013 when they get your funds.

Generally, you can contribute up to $5,000 of your earnings for 2012 or up to $6,000 if you are age 50 or older in 2012. You can fund a traditional IRA, a Roth IRA (if you qualify), or both, but your total contributions cannot be more than these amounts.

Note: IRA contribution limits increase in 2013 to $5,500 ($6,500 if age 50 or older).

Traditional IRA: You may be able to take a tax deduction for the contributions to a traditional IRA, depending on your income and whether you or your spouse, if filing jointly, are covered by an employer’s pension plan.

Roth IRA: You cannot deduct Roth IRA contributions, but the earnings on a Roth IRA may be tax-free if you meet the conditions for a qualified distribution.

Each year, the IRS announces the cost of living adjustments and limitation for retirement savings plans.

Saving for retirement should be part of everyone’s financial plan and it’s important to review your retirement goals every year in order to maximize savings. If you need help with your retirement plans, give us a call. We’re happy to help.

Financial Planning Investments Tax

It’s Not Too Late to Make a 2011 IRA Contribution

If you haven’t contributed funds to an Individual Retirement Arrangement for tax year 2011, or if you’ve put in less than the maximum allowed, you still have time to do so. You can contribute to either a traditional or Roth IRA until the April due date for filing your tax return for 2011, not including extensions.

Be sure to tell the IRA trustee that the contribution is for 2011. Otherwise, the trustee may report the contribution as being for 2012 when they get your funds.

Generally, you can contribute up to $5,000 of your earnings for 2011 or up to $6,000 if you are age 50 or older in 2011. You can fund a traditional IRA, a Roth IRA (if you qualify), or both, but your total contributions cannot be more than these amounts.

Note: IRA contribution limits remain the same in 2012 – $5,000, or $6,000 if age 50 or older.

Traditional IRA: You may be able to take a tax deduction for the contributions to a traditional IRA, depending on your income and whether you or your spouse, if filing jointly, are covered by an employer’s pension plan.

Roth IRA: You cannot deduct Roth IRA contributions, but the earnings on a Roth IRA may be tax-free if you meet the conditions for a qualified distribution.

Each year, the IRS announces the cost of living adjustments and limitation for retirement savings plans. In 2011 and 2012, however, the contribution limits for defined benefit and defined contribution plans did not change as the Consumer Price Index did not meet the regulatory thresholds.

Saving for retirement should be part of everyone’s financial plan and it’s important to review your retirement goals every year in order to maximize savings. If you need help with your retirement plans, give us a call. We’re happy to help.

Asset Protection Estate Financial Planning Investments

How to Prepare for a Successful Retirement

As you approach retirement, it’s vital that you pay attention to key financial matters. Here are some of the items that you should check:

Health Insurance.
Are you among the lucky few who will continue to be covered after retirement? If not, then you’ll need to replace your health coverage.

If you will be eligible for Medicare at the time of your retirement, then you may want to start checking into “Medigap” coverage. Medigap insurance is a supplemental health insurance sold to individuals age 65 and older that covers medical expenses not covered or only partially covered by Medicare.

Tip: Before you retire, take care of any non-emergency medical, dental, or optical needs (if your employee plan coverage is broader than Medicare).

Other Types of Insurance.
Once you retire, you may need to replace employer-provided life insurance with extra coverage. You should also consider purchasing long-term health care insurance in case of a lengthy nursing home stay in the future.

Social Security.
Decide whether you want to take early Social Security benefits if you’re retiring before your full retirement age, which is currently 66 years of age for people born between 1943 and 1954. You can get 75% of your benefits at age 62.

Tip: For most people, taking Social Security benefits at their full retirement age makes the most financial sense. If you think you might need to take early benefits, give us a call. We’d be happy to discuss this with you.

Company Plan Payout.
You should plan well in advance how you’ll take the payout from your pension plan or 401(k) plan. For example, will you transfer the funds to an conventional or Roth IRA? How will the funds be invested?

Relocation.
If you’re planning a move to another state, make sure that you fully explore the financial ramifications of living there–before you move. Cost of living rates can vary significantly from one region of the country to another.

We Can Help. Retirement is an exciting time and planning in advance can make it a much smoother transition. Please contact us if you have any questions, need assistance or just want some additional guidance.

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