The Retirement Goal: Put Money Away
Final in a series of blogs to help you reduce debt
You should be putting money away for retirement. New rules allow for more people to participate in Roth 401 (k) or roll their IRA into a Roth. Prior to last year, many higher-income professionals exceeded eligible income levels, but now is a good time to review retirement plans to see which is best. These programs afford the opportunity for younger professionals to contribute funds, by paying the associated taxes on this now. In turn, the money will accumulate tax free and there will be no subsequent taxes on any distributions taken in future years. More seasoned professionals with earned income that has surpassed these thresholds should consider converting their traditional IRAs into Roth IRAs. By paying the tax on these retirement funds now, it will provide relief from future tax burdens. It is important to remember thought that even if you convert your traditional IRA into a Roth IRA, you still are unable to contribute to a Roth IRA. This could result in even larger tax savings. While we have a two-year extension of the Bush-era tax cuts, indicators point towards the increasing of individual tax rates in coming years.
It took a lot to become a successful professional – a lot of education, a lot of study, a lot of time and for many, a lot of debt. Now, with just a few tweaks, you can reap a lot of benefit.