5 Things You Need to Know About The Traditional IRA 2014

traditional ira rules and limitsYou know how much I love the Roth IRA.  Love, love, love it!!

I’m actually more in love with the Roth IRA than I am the 401k.

And you already know how I feel about target date mutual funds.  <blah!>

But what about the Traditional IRA?  Does it still have it’s place in your retirement plan? You betcha!!

If you are fortunate to work at a company that offers a match on your 401(k) deposits, don’t walk away from that free money. There, however, might be some instances where the traditional IRA has its place.

Here’s a closer look at some of the rules of the Traditional IRA Account.

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Earn Too Much For a Roth IRA? Nonsense!

earn too much roth iraDo you earn too much to make a Roth IRA contribution?

Under IRS rules, you’re prohibited from making a Roth IRA contribution if your modified adjustable gross income is more than:

  • $183,000 if you’re married filing jointly, or
  • $125,000 if you’re filing as a single person or head of household

If you fall into this category, you can’t make a Roth IRA contribution, right? Wrong.

While you can’t make a direct contribution to your Roth IRA, that doesn’t mean you should write off the idea of funding your Roth IRA this year.

You can still make an indirect contribution to your Roth IRA regardless of how much money you earn, and whether it’s a direct or indirect contribution, what’s most important is getting that money into your Roth IRA where it can grow tax-free and where you can withdraw it tax-free in your retirement years.
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