It’s that time of year again. Time to get an early start on tax season, from taking required IRA distributions to maximizing your IRA contributions if you are working. Now is the time to declutter, organize paperwork and speak with your advisor to make sure you are on track with your investment portfolio goals. Wouldn’t it be nice to head into the new year free of all this stress? There are many things you can start doing right now.
Soon, investors over the age of 70 ½ will receive their Required Minimum Distribution Letter stating how much of a distribution needs to be taken by December 31st. This is a specific amount calculated based on your age and the balance of your retirement accounts on December 31 of the previous year. Roth IRA accounts are excluded from these required distributions.
If you must take annual distributions, you can set up a Periodic Distribution Plan that can be customized to distribute monthly quarterly or annually. Many investors don’t realize that if you don’t need the money for expenses, you can distribute the funds into an individual brokerage account and continue to invest the proceeds. The funds are always available to withdraw when income needs arise.
A qualified charitable distribution (QCD) is another option for your required distribution. The distribution can go directly to your favorite charity/charities. You can use a QCD to donate up to $100,000/year without being taxed.
For everyone that is working, be sure to max out your IRA each year. For 2019 you can contribute up to $6,000 if you’re under 50 and $19,000 into a 401(k). If you’re 50 or over the maximum contribution increases to $7,000 and $25,000, respectively. It is amazing what the power of compound interest can do when you contribute to an IRA annually at a young age. For a great article about compound interest you can visit our website at www.investspectrum.com, go to Resources-Our Newsletter and select the April 2019 newsletter. The article is on the last page.
These are just a few of the steps you can take to get a start on tax season. By starting now, it will give you time to make any adjustments to your investment portfolio well before any deadlines approach. At Spectrum Financial we help implement these tax season steps into a year-round process for our clients. Call us today at 888-463-7600 to learn more about our company and how we can help you by creating investment portfolios to meet your unique goals.
***When maximizing retirement contributions, first consult a qualified tax professional for details based on your personal situation.