Plan Your Retirement Now With Roth IRA
True to the old saying, Make hay while the sun shines, it is always a good idea to make provisions for those days when your weary body will no longer be able to take the demand of earning a livelihood for yourself. So it is always wise to start saving for retirement days while you are fit enough to do a regular job. Once you have decided to put aside some funds for retirement in an individual Retirement Account (IRA), now you must consider an appropriate IRA option that not only gives you the best return on your savings but also gives you the assurance of safeguarding your hard earned money. One such option happens to be the gold IRA investment.
Roth IRA is ideal for retirement
Roth IRA is a type of retirement account conceptualized by William Roth, a senator hailing from that State of Delaware. In this kind of account, the account holder is also the income tax payee. The tax that you pay is calculated on your salary. Thus, every month a certain amount is contributed to the Roth IRA account post taxation. This tax-free deposit keeps snowballing with time and when it is time for retirement, you will be have a substantial amount of money in your Roth IRA account.
When you invest in a Roth IRA account, you have to be wary of the Roth IRA income limits and Roth IRA contribution limits. These aren’t anything like traditional IRA accounts therefore it pays to be knowledgeable about these.
Roth IRA Contribution And Income Limits
Saving for retirement was what IRAs were meant to encourage people to do, as it offered as a significant tax break. They are meant for ordinary working citizens as opposed to the wealthy for instance, as they are prevented by income limits from participating. They are also not intended for trust fund kids since contributions are made from salary rather than investments or any other income. The rules for Roth IRA contribution limits and Roth IRA income limits change each year.
|Plan Type||Sponsorship||2015 Contribution Limit||Roth Option?||Allow Gold Stocks?||Allow Gold ETFs?||Allow Gold Bullion|
|401(k)||Private Employer||$18,000 / $24,000||Yes||Maybe||Maybe||No|
|Solo 401(k)||Self-employed||$18,000 / $24,000||Yes||Yes||Yes||Yes|
|Keogh Plan||Self-employed or Unincorporated Employer||$53,000||No||Maybe||Maybe||No|
|403(b)||Government or Non-profit Employer||$18,000 / $24,000||Yes||Maybe||Maybe||No|
|457(b)||Government or Tax-exempt Employer||$18,000 / $24,000||Yes||Maybe||Maybe||No|
|Simple IRA||Private Employer||$12,500 / $15,000||Yes||Yes||Yes||Maybe|
|SEP IRA||Business Owners & Self-employed||$53,000||Yes||Yes||Yes||Maybe|
|Profit Sharing Plan||Private Employer||$53,000||No||Maybe||No||No|
|Money Purchase Plan||Private Employer||$53,000||No||Maybe||Maybe||No|
|Self Directed IRA||Individual||$5,500 / $6,500||Yes||Yes||Yes||Yes|
|Traditional IRA||Individual||$5,500 / $6,500||Yes||Yes||Yes||No|
|Precious Metals IRA||Individual||$5,500 / $6,500||Yes||Yes||Yes||Yes|
|Thrift Savings Plan (TSP)||Government or Military||$53,000||No||No||No||No|
Any person with a self-employment income earned by partners and sole proprietors, or with a taxable compensation for the year can establish a Roth IRA and fund it. To become eligible for making regular contributions, the person must have a MAGI (modified adjusted gross income) that is less than a specified amount that depends on his or her tax-filing status.
A Roth IRA should be established with an institution that has gotten approval from IRS to offer IRAs. Such institutions include brokerage firms, banks, savings & loan associations and credit unions that are federally insured. It can be established at any given time. Contributions for a tax year however should be made by the tax-filing deadline of the IRA owner, which generally is 15th April of the following year. Extensions for tax-filling do not apply.
When establishing an IRA, two basic documents must be given to the IRA owner. They are the IRA disclosure statement and the IRA plan document and adoption agreement. The documents explain the rules and regulations governing operation of the Roth IRA while establishing an agreement between the owner and the IRA trustee or custodian.
For people working for an employer, the compensation eligible for funding a Roth IRA includes salaries, wages, bonuses, commissions, and other amounts the person is paid for services he or she performs for the employer. In the case of a partner in a partnership or a self-employed person, compensation consists of the person’s net earnings from their business. However, the figure is less any deductions allowed for contributions made on the person’s behalf to retirement plans. It is also further reduced by half of the person’s self-employment taxes.
Other compensations eligible for the aim of making regular contributions to Roth IRA are inclusive of taxable amounts the individual receives resulting from a divorce decree. There are certain sources of income that are not eligible compensation for making Roth IRA contributions. They are dividends and interests, profits from properties such as rental income, as well as other amounts not generally included in taxable income.
For people whose MAGI falls within a specified range, they might not be able to part with the entire contribution limit. Such individuals must utilize a certain formula to determine the highest amount they can contribute to a Roth IRA. It is intended to be a retirement account, meaning that penalties apply in case someone misuses it by making withdrawals too early.
Roth IRA Contribution Limits
It will be pertinent to note that contribution limits for traditional IRA as well as Roth IRA are revised every year, and it will be advisable to check on their limits at the beginning of every new year. Roth retirement accounts are often considered to be a safe and secure investment option, especially those who are looking to invest the money as part of their retirement plan. However, you must understand that there are contribution limits to a Roth account. According to the updated 2015 numbers, one can contribute up to $5,500 to a Roth investment account. However, if you are aged 50 or older, you can contribute up to $6,500, unless you are earning less than that amount. One must also remember that no one can contribute more than the amount one enjoys as tax compensation for the year. Above is the absolute limit, but there are also income limits.
Roth IRA Income Limits
In 2015 if you are a married couple and you are filling jointly, the phase-out range is $183,001 and $193,000. If you are single, the phase-out range is $116,001 and $131,000. However, if you are married and you are filing separately and if you are covered by more than one retirement plan, the phase out range is $0-$10,000.
If you are looking to save for retirement, this means that you are planning long-term. In such cases IRAs are often considered a reliable and safer option. Many IRAs also give you the opportunities to diversify your portfolio by investing in different channels. There are also certain advantages of investing in Roth accounts compared to investing in traditional IRAs. Qualified distributions in a Roth, for example, are tax free, and this includes distribution of earnings, too.
You should seriously consider a gold backlink IRA. It is possible to convert a regular Roth IRA account to rollover IRA to gold. In order to do this, you will need to first find out whether the company you have your account with deals with investments in precious metals or not. Thus, it is very important to choose a company that offers gold IRA accounts. If the company in question allows precious metal investments then you can use the money lying in your account to purchase gold. Of course, you will need to follow the rules and regulations laid down by the company.
Gold for Retirement
The reason why gold IRA investment is the best is because an IRA backed by gold is the most secure and sure way of leveraging your investment for a long term. A look at the gold price trends in the past will tell you that gold is the only precious metal that has provided investors the stability to protect their funds and optimize ROI over a long period.
What is a 401k Rollover to Gold
A rollover from a 401K to a pre-tax account provides you government tax shelter benefits. Commonly you would go for a rollover when you are quitting your old job or joining a new one but you can rollover at any time. With rollover, you can transfer the money sitting in your previous employer’s employee retirement account to an account of your choice. This gives you complete control of your money and you can also choose to invest it through different channels for reasons of diversifying. Although your money is supposed to be safe even with the company you have left years ago (as long as you have more than $5,000), you still shouldn’t look to risk that amount at any point. For example, if a company goes bankrupt, you will lose all of the amount, and there is nothing you can do about that.