No matter what your age, you should always make your annual contribution to your IRA by the deadline of April 15th of the following year. If you have available funds, you should also make your current yearly contribution early to get maximum growth before the end of the year.
If you haven’t already, you should also consider converting to a Roth IRA to get started on tax-free growth. Unlike a regular IRA, with a ROTH you don’t have to take the money out when you reach 70 ½, there’s no required minimum distribution, and your money will continue to grow tax-free. In addition, if you continue to have earnings after retirement, you can continue to put more money into the Roth that will also grow tax-free. When you pass away and leave it to your children, it will continue to grow tax-free. It’s a great vehicle.
There’s some risk involved because you’re paying the tax upfront, but the upside is that you will never pay taxes on any return on investment inside of a ROTH.
If you are 70 and have traditional IRAs, it’s time to take your mandatory distribution. You have until April 1st of the year following the year you turn 70 ½. If you fail to do this, you will pay a penalty of 50% of the amount you should have taken. The mandatory distribution applies to all IRAs and must take into account the ending market value of all assets before calculation takes place.
You can also put up to $2,000 per child per year into an educational savings account. The child does not have to be related to you, and it has no effect on the child’s earned income.
Now is a good time to consolidate retirement accounts into one and get the economy of fees and have the opportunity to be more proactive.
If you made too much of a contribution last year for any reason, you can undo it by April 15th without penalty.
Make all your contributions to the maximum, particularly those that are eligible for a tax deduction. Check your limits, speak too your financial planner or CPA and review your income levels to determine what deductions and contributions your eligible for, and max them out.
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