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IRA Planning

What Is a 401(k) Rollover?

If you're looking to save money for a comfortable retirement, you want to consider an Individual Retirement Account (IRA). It ensures you won't outlive your funds and fail to achieve your desires in your golden years. Do you have a 401(k) retirement plan in place? You need to consider an IRA account.

What Is IRA Planning

IRA planning involves creating a savings account and is a long-term investment. Like a 401(k) account, an IRA allows you to save for retirement. Anyone earning an income can open an account and enjoy tax advantages.

IRA Planning Considerations

There are different IRA accounts, and you can choose one depending on your situation. Types of IRAs include:

Traditional IRA:

These are some of the most popular IRA accounts today. If you think your tax bracket will be higher after retirement than today, a traditional IRA might be what you need. Also, Individuals without an employer-sponsored retirement need this.

Roth IRA:

Contributions to these accounts depend on your income. Roth IRA limits can go up to $6,000 and $7,000 (For individuals aged 50+). Rules for withdrawing from this account are more lenient, and you can receive your money penalty-free.


A simplified employee pension (SEP) is like a traditional IRA. However, this isn't funded by an employer but by the employee. Retirement distributions are taxable, but the account is tax-free during growth.

Non-deductible IRA:

Do you have a retirement plan, but do your earnings supersede the IRA income limits? If so, you won't take away your traditional IRA savings. However, you can add money to the IRA account.

Spousal IRA:

Contributing to an IRA requires you to be an income earner. If your spousal contributions don't work, you can consider a separate IRA. This could be a traditional or Roth IRA.


Savings Incentive Match Plan for Employees caters to self-employed individuals and small companies. It is similar to an employer-sponsored 401 (k). A SIMPLE IRA allows employees to use salary deferral to contribute.

Self-directed IRAs:

The eligibility for self-directed IRA contribution is similar to that of Roth or traditional IRAs. The difference is the amount you add to the account.

Client Centered

Pros of IRA Accounts

  • Tax deductions
  • Tax-free growth

Cons of IRA Accounts

  • Strict contribution limitations
  • Possible penalties
  • Mandatory withdrawals

Roth Conversion Strategies

Are you considering a Roth IRA conversion? Here are some key points to keep in mind:

  • A Roth IRA conversion can lower your taxes in retirement.
  • With a Roth IRA, you can withdraw contributions (not earnings) tax free at any time and for any reason.
  • Moving to a Roth IRA also means that you won’t have to take required minimum distributions (RMDs) on your account when you reach age 72.
  • You’ll owe tax on any amount you convert, and it could be substantial enough to push you into a higher tax bracket.

The bottom line is that your tax considerations are a major influence on the choice to convert to a Roth IRa or not. We can look at your individual circumstances and help you in deciding if a Roth Conversion is right for you.

Frequently Asked Questions

Is your annual income too high?

If yes, one of the best IRA accounts you want to consider today is a Roth IRA. Your contributions aren't taxable, and you won't need income tax payment when making your withdrawals after retirement.
Also, you can withdraw your contributions to a Roth IRA before you retire, and you won't be required a penalty. It means you can use a Roth IRA account as an emergency fund.

What Are the Income Limits for a Roth IRA?

Are you looking to contribute to an IRA account as a single tax filer in 2022? You require a $144,000 or less modified adjusted gross income (MAGI). It increased from $140,000 in 2021. Are you married and filing taxes jointly? Your MAGI should be under $214,000 compared to $208,000 in 2021.

When Can You Withdraw from Roth IRA?

Unlike 401 (k) s and traditional IRAs, withdrawing your contributions from a Roth Individual retirement account is more flexible. However, it's essential to do your due diligence before the withdrawal. For example, if you fail to meet some requirements, you could pay an early withdrawal penalty of 10%

If you meet all the requirements for an IRA account, you can withdraw your funds without incurring any penalties.

What Is the Difference between Traditional IRA and Roth IRA?

The primary difference between a traditional IRA and Roth IRA lies in tax advantage timing. For example, a Roth IRA allows you to pay withdrawal taxes later, but you can deduct contributions now. On the flip side, traditional IRAs work like penalized pensions. They dictate and restrict funds access while providing significant tax breaks.

How Much Can Be Deposited Per Child Per Year in an Education IRA?

A child who earns an income can contribute to an IRA account regardless of age. IRA contributions may not surpass the earnings of a minor. For example, only $1000 can go to the account of a child who makes $1000 per year. The maximum contribution per child in 2022 is $6000.

Let an Experienced Advisor Assist

Navigating IRA planning can be challenging if you aren't well-informed. If you want everything to go as expected, ensure you work with a qualified advisor. They will help you avoid most pitfalls.

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