Mutual Fund Resource Center

Planning for Retirement


Things You Should Know About IRA Investing

  • Update your beneficiaries
    Marriage, divorce, childbirth or death can affect your beneficiary choices so make sure you update your designations when circumstances in your life change.
     
  • File a Form 8606 when you make nondeductible contributions to a Traditional IRA
    Since it is the taxpayer's responsibility to keep track of such information, using this tax form is an efficient way to keep your records up to date.
     
  • Contributions vs. deductibility
    Many people confuse the income limits for deductible Traditional IRA contributions with being able to contribute to a Traditional IRA. Anyone with earned income can contribute to a Traditional IRA; the income guidelines tell a taxpayer what amount can be deducted.
     
  • It's never too early to start
    Although minors cannot open their own IRA accounts (due to the fact that an IRA is a contract and a minor cannot engage in a legal contract), a parent or guardian can open an IRA for the minor and act as custodian, so long as the minor has earned income (W-2 wages). When filling out the application, the child's name should appear as the "Owner's Name" followed by the word "minor". The parent's/guardian's name should be listed below the child's name followed by "Parent or Guardian".
     
  • Don't miss the deadline
    Regular contributions to Traditional and Roth IRAs must be received by the tax filing deadline NOT including extensions. For example, 2020 contributions must be made by April 15, 2021.
      
  • Details on Tax-Free Roth IRA distributions
    For a Roth distribution to be tax-free, the five-year holding period must be satisfied AND the distribution must be made as one of the following; on or after age 59½, because of disability, made to a beneficiary or to your estate after your death, or one that meets the requirements for a first home purchase.

 

This information does not constitute tax advice. Please consult your tax advisor and/or state and local tax offices for more complete information.



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