Savings Options with Government Roth IRA Savings Plans

Mack — Fri, 09 Sep 2011 17:42:41 +0000

A general mantra professed by the investment management industry is that it is never too late or too early to begin saving for the future. Even in these tough economic times, this financial imperative should be addressed with some attempt at rearranging budget priorities and setting aside a regular amount from each month’s income for this obvious need. Our government firmly supports this effort and has created a number of programs within its tax code to encourage participation in various savings programs.

Most individuals have learned of these programs through plans offered by their employers in the form of 401(k) savings plans. If you are not covered by one of these plans, then an “Individual Retirement Account”, or “IRA”, can be set up with your banker or broker to provide tax-sheltered benefits going forward on your personal contributions. While most of us are familiar with the notion of an IRA, many consumers are unaware that there are two types of an IRA, the most recent creation being the “Roth IRA”.

The concept of an IRA was created decades ago, but in 1998, a new form was developed, the “Roth IRA”, named after a late senator from our Congress. This special form of a savings account addressed many of the shortcomings of a standard IRA that prevented many consumers from taking advantage of these aspects of the tax code. For example, if you participated in an employer-sponsored plan at work, then you could not have a separate IRA. If you did have a traditional IRA, you also faced excessive tax penalties for early withdrawals, and withdrawing your funds was required after you reached an age of 70 ½.

Here is a brief list of the basis benefits of a Roth IRA:

You may participate in a Roth IRA, even if you are in an employer plan;
You may make withdrawals at any time without the imposition of a tax penalty;
You do not have to make withdrawals after 70 ½, and you may continue to make contributions;
You may convert a standard IRA to a Roth IRA;
Withdrawals are tax free up to the point that your original contributions have been withdrawn. You then pay tax on any “converted” contributions from a standard IRA, but your earnings while under the Roth IRA are tax free, subject to certain rules.

The government never uses taxpayer monies to subsidize a certain program without restrictions, and the same can be said for Roth IRAs. These restrictions, however, are fairly straightforward for the general public. Here is another brief list:

You do not get a tax deduction for your contributions of savings or net working capital ;
In 2011, you may contribute up to $5,000 as long as you or your spouse has qualifying income in excess of that amount for the year;
If you are over the age of 50, your contribution limit increases to $6,000;
If your Adjusted Gross Income exceeds certain levels ($107,000 for single individuals and $169,000 for married couples filing joint returns), then your allowable contributions will be reduced according to IRS table values;
You may convert a standard IRA to a Roth IRA, but there may be conversion taxes to pay. Consult your tax advisor to determine if conversion works for you in the long run.

The real benefits of pursuing a Roth IRA savings strategy are on the distribution side of the equation. Although you give up a tax deduction to make contributions of savings or net working capital, something permitted with a standard IRA, you can make withdrawals of your contributions at any time without the risk of a penalty or the need to report ordinary income in the year of withdrawal. However, the earnings on your contributions are not taxed when earned, nor are they ever taxed as long as at least five years have passed since you set up your Roth IRA and you are over 59 ½ years of age.

Since everyone’s personal finances are different, consult a professional investment advisor or your banker to assess if a Roth IRA is a prudent investment tool for your unique situation.

Roundup of Recent Investment Info Sites to Watch

Mack — Fri, 18 Jun 2010 16:25:35 +0000

I have been cruising the internet today and found some very interesting sites for you to look into. Here is a variety of investment ideas that may be important for your strategy. Happy Investments to you!

The southeast portion of the US was one of the first regions to recover after the real estate crisis. This is good news for owners of Atlanta investment property, as they quickly saw minimal gains. Atlanta remains a popular location, which means there are locations to buy and rent out for every pocketbook.

Forex investing has gotten a bad rap over the years, but the truth is that investing in the forex markets is a legitimate way to strengthen your portfolio. Knowing that there are inherent risks involved with any type of investment is the key to realizing that due diligence should be executed when researching any potential opportunity.

Forex investments can be risky, but also very lucrative. Critical skills are needed to profit in this highly competitive investment landscape, but these skills can be acquired through education, training and practice trading utilizing virtual (demo) accounts from the right broker. There is money on the table for those who can follow a system, control their emotions and practice good money management methods.

Costa Rica has more expatriates than any other country in Central America and investors have been purchasing Costa Rica real estate for decades. It’s not hard to understand why. Costa Rica is a beautiful country with a rich biodiversity, benefit laden retirement program, stable democratic government and a growing economy.

If you were told that you could get free money in the form of a real estate grant that you would never have to pay back, what would you say? Nothing is free these days but if you are looking for a down payment on your mortgage, help towards the closing costs for your home purchase, or money to refurbish your home and then you could qualify for a real estate grant.

The stock market can be a daunting place for a beginner investor. There are so many types of stocks, bonds and other instruments to trade – where does one start? Here’s an idea: try exchange traded funds. ETFs are like a mutual fund because they are a fund of companies in one instrument, however they are traded like stocks on the exchange. So these funds can be a great place to start – with options like financial ETFs, foreign currency ETFS, commodity ETFs, derivative ETFs to name a few. As always, do your research on your ETFs of choice before investing in any given sector.

So you want to be a real estate investor? Have you been thinking about buying investment property for a long time? Have you read all the books and watched all the infomercials, but just didn’t know where to start? Here are some quick steps to get you started toward your investment property dreams.

To add new investment ideas to your portfolio, take some time to learn to invest money in vehicles you haven’t tried before. Consider investments in global index or commodity ETFs, currencies, corporate bonds or real estate. Try tracking these investments with an online virtual trading account until you feel like you have a handle on how these investments work, and add these to your portfolio to improve diversification.

There are times where a penny stock investment can make you a profit and then there are times you will lose your investment. Research is the key to helping you reach your goal and there is no substitute for it. Take your time and do it right.

If you are experiencing significant financial turmoil, you may have wondered whether you should declare yourself bankrupt. At Claiming Bankruptcy, we provide you with all the information you need to make an informed decision, allowing you to get on with your life.

That’s all for this month. Hope you enjoyed the Roundup!

Change Counts » Personal Finance

Savings Options with Government Roth IRA Savings Plans

Roundup of Recent Investment Info Sites to Watch