Mature couple walking on the beach

IRA – Still Part of a Smart Investment Strategy.

If you owe taxes this year, an IRA is still the best way to defer taxes.

Your taxes may have increased for a number of reasons: capital gains, a two income family, a raise, sales commissions or a number of other reasons that put you in a high income bracket.

A good strategy is still to use a traditional IRA to defer part of your taxes. If you’re over 50, you can defer up to $6500 into a traditional IRA and an additional $6500 for your spouse. That’s a total of $13,000 off your taxable income for the year. You can defer $13,000 this year until later, and pay taxes on it when you’re making a lot less money. (Hmmm…I hope that never happens).

A Roth IRA is a great way to earn interest without increasing your tax bill. Either way, it’s worth giving some consideration. See current IRA limits at https://www.irs.gov/retirement-plans/ira-deduction-limits

 

Let’s review the current IRA limits

 

Contribution Limits   2018 2019
Traditional IRA  
Traditional IRA Contribution Limit  $5,500  $6000
Traditional IRA Contribution Limit if 50 or over  $6,500  $7000
If you’re covered by retirement at work:*
IRA Income Limits (AGI) – For single filers phase out starts at:  $63,000  $64,000
Ineligible at  $73,000  $74,000
IRA Income Limits- For married filers phase out starts at:  $ 100,000  $103,000
Ineligible at:  $121,000  $123 See,000
*Your deduction is allowed in full if you (and your spouse, if you are married) aren’t covered by a retirement plan at work.
Roth IRA
Roth IRA Contribution Limit  $5,500  $6,000
Roth IRA Contribution Limit if age 50 or over  $6,500  $7,000
Roth IRA Income Limits (AGI) – For single filesr phase out starts at:  $120,000  $122,000
Ineligible at  $135000  $137,000
Roth IRA Income Limits- For married filers phase out starts at:  $189000  $193.000
Ineligible at:  $199000  $203,000

 

Minimizing Your Tax Bill is an American Pastime.

Be sure to pay your fair share but, try not to overpay. Do your research or get advice from a good CPA. And remember, Utah Heritage Credit Unon has IRAs and their fees are very reasonable. It’s a good place to get started until you have enough money to justify the services of a good Financial Planner.

 

Other Strategies

 

  1. You can take advantage of IRAs until the year your turn 70 1/2 as long as you have earned income.
  2. You can make a contribution for 2018 until April 15, 2018.
  3. For tax deferment. IRAs are as good as it get.