IRAs can be an important tool to maintain your lifestyle in retirement, but there are many rules and regulations to navigate.IRAs can be an important tool to maintain your lifestyle in retirement, but there are many rules and regulations to navigate, and they have changed over time.  But the complexity can also create opportunities for you.  When it comes to IRAs, MBR Financial in Houston, TX will help you understand those advantages and how to leverage them to benefit you.

CONTRIBUTIONS:  Contributions to IRAs can be made at any age but there are limitations.  Previously, you could only contribute up to age 70½.  While the age limit is gone, you must still have earned income to make contributions.  The good news is that you can contribute up to 100% of it.  2021 limits are $6,000 for regular contributions.

Catch-up contributions allow individuals over the age of 50 to contribute more.  Both regular and catch-up contribution limits are inflation-adjusted by amounts announced annually by the IRS.  2020 catch-up contribution limits are $1,000.

You can contribute for your spouse, even if your spouse has no earned income.  The catch here is that contributions must still come only from earned income, so you need enough earned income to cover both your contribution and your spouse’s.  For example, if you are retired but have a part-time job or business at which you earn at least $14,000, you could both make regular and catch-up contributions in 2021.

Contributions to IRAs may or may not be deductible.  Regardless of your income, you may deduct your IRA contribution on your tax return if neither you nor your spouse are covered by a retirement plan by your employer.  However, if at least one spouse is covered by a retirement plan, then you must be under the IRA deduction limits based on your filing status to take a full or partial tax deduction.   If you are not eligible to deduct your contribution, you can still contribute up to the limit with after-tax monies.  Disclose after-tax contributions on Form 8606 and file with  your tax return.

WITHDRAWALS:  Premature IRAs withdrawals, prior to age 59½, are subject to a 10% early withdrawal.  Under certain circumstances, the early withdrawal penalty can be avoided, but it is not easy. Unlike a 401K, you cannot borrow from your IRA.

MBR Financial in Houston, TX can help you understand the ins and outs of contributions and withdrawals.  IRAs are often the cornerstone of a retirement plan.  We can help you leverage everything to benefit you.

Required Minimum Distributions (RMDs) must begin from an IRA when its owner turns 72 (recently increased from 70½).  The calculation uses an age-based factor applied to the year-end value of each of your IRA accounts.  Withdrawals can come from any of your IRA accounts as long as the total RMD amount is satisfied.  Conversely, RMDs from 401K plan must be taken from each plan.

IRAs are also a powerful charitable planning vehicle once you turn 70½. Fortunately, the age for this did not change when RMDs moved to 72.  A Qualified Charitable Distribution (QDC) is a donation transferred directly to a charity from your IRA.  A QDC counts toward your RMD and is excluded from your taxable income.  A QDC has the same effect as a charitable deduction without the need to itemize your taxes.   At MBR Financial, we help clients understand the implications of different withdrawal strategies and show charitable clients how useful QCDs can be.

MBR Financial in Houston, TX can help you understand IRA rules and planning opportunities, so that you can maximize your benefits to align with your needs and those of your familyFind out more by calling us at (832) 667-8787 to schedule a free initial consultation.


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