Thinking about opening an IRA in 2016? Well your in good hands, at Jazz Wealth were in the business of managing investments NOT charging for financial advice… that means the advice is free…

A traditional IRA is an investment vehicle that allows you to save and invest for retirement by deferring taxes until retirement. Contributions are made pre-tax. When you hit retirement you will pay the taxes on any contributions along with any gains. This type of account is usually setup by someone who wishes to defer taxes until retirement when they feel they will be in a lower tax bracket.

As with the Roth IRA there are some specific rules you need to know…but never fear…

~~We speak plain English here at Jazz~~

The first thing we want to check is that you are even eligible to open or contribute to an IRA. According to the IRS for 2016 you can contribute if you (or your spouse if filing jointly) have some kind of taxable income, but not after you are age 70½ or older.

“Taxable” income can come from a number of sources, typically in the form of salary, hourly wages, or profits from a small business.
Now the IRS is very clear about what doesn’t count as taxable, or earned income.

For example, Earnings and profits from property, such as rental income or pension or annuity income would not be counted.

If you have more questions what is not counted feel free to contact me directly at 727.492.0314.

For traditional IRA’s the limits are the same as Roth IRA’s. You can contribute up to $5,500 in a year, or up to $6,500 if you are over 50. This is what is known as a Catch Up Allowance.

Now these contributions can be made at any point thought the year in any increment, and even all the way up to tax time. So in 2016, for instance, you can make a contribution any time from January 1, 2016 all the way to April 17, 2017.

Now remember that we said these contributions are made pre-tax or sometimes you may hear people say they are tax deductible contributions. Well, this is true but there are some limitations. If you (or your spouse, if you are married) have a retirement plan at work your deduction may be limited. Also your deductions may be limited if your income exceeds certain levels.

Remember we’re here to help if you have questions.

Now if you don’t have a retirement plan at work then your contributions should be fully deductible.
If you are ready to take a withdrawal from your account, surely that can’t be all that complicated right? You do have to follow some rules.

Any and all deductible contributions that you have made over the years, along with earnings are taxable when you withdraw them. Also, if your under the age 59 ½ you may have to pay an additional 10% tax penalty for an early withdrawal.

Now there are exceptions to this. Some of the exceptions that are allowed are for first time homebuyers, or maybe you want to go back to college. In any case the IRS is very particular about this so you may want to get some help.

Now in a Roth IRA, the original owner of the Roth isn’t ever required to start taking distributions but in a Traditional IRA this is not the case. In a traditional IRA you must start taking distributions by April 1 following the year in which you turn age 70½ and by December 31 of each year after.

Basically, after you turn 70 ½ start taking your money out or the IRS will take it for you.

If this is a little overwhelming or if you have more questions feel free to contact us at 727.492.0314. At Jazz we are here to help you in every step of your financial journey.

Unlike the old school advisors that make money by selling you commission based products, our business model is to put the client first. We only grow when you grow and we give you every possible tool to help you grow along the way.

The best part is you keep your account in your name, and we never have access to your hard earned funds.

For more information:

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