Foreward

The Taxpayers Relief Act of 1997 - all 800+ pages of it - contained a new provision allowing investors to make non-tax deductible contributions to a Roth IRA. For some, this can represent a powerful new tool to add to your retirement planning toolbox.

How Did the Roth IRA get its Name?

The Roth IRA got its name from William V. Roth, Jr. (now deceased) who was the Chairman of the Senate Finance Committee in 1997. Mr. Roth will undoubtedly go down in history as championing one of the better tax-sensitive, saving vehicles of our modern era.

Federally Tax Free Saving

All contributions made to Roth IRA’s accumulate tax free and may never be subject to federal income taxation upon distribution as long as the account has been open for at least five (5) years or you are past age 59 . Please note that distributions are federally tax-free and not necessarily state tax-free.

Penalty Free Access to Your Contributions

You may withdrawal your contributions (principal) made to a Roth IRA without restrictions or penalties at any time – unless your Roth IRA was established by converting from a traditional IRA plan.

Conversion Options

If you own a traditional IRA, it may make economic sense for you to convert to a Roth IRA, but a great deal of thought and analysis should go into it beforehand.

Several assumptions will have to be made including tax bracket, other sources of potential income, loss of purchasing power due to taxation on conversion.

However, one item is fairly certain in that conventional wisdom tells us that under most circumstances, it will probably make more sense to begin contributing to a Roth IRA than it will be a Traditional IRA.

If you would like to explore the option on converting existing IRA accounts to a Roth IRA, call us at 1-800-480-7526. We have conversion software that will analyze whether or not this will make sense for you.

Who is Eligible

For tax year 2014 - ages 0-50: Your contribution is limited to $5,500 or 100% of your compensation whichever is less.

For tax year 2014 - ages 50 or older:   Your contribution limit is $6,500 or 100% of your compensation whichever is less.

For tax year 2015 - ages 0-50: Your contribution is limited to $5,500 or 100% of your compensation whichever is less.

For tax year 2015 - ages 50 or older:   Your contribution limit is $6,500 or 100% of your compensation whichever is less.

As with other tax-qualified plans, there are phase out reductions (based on MAGI) and other qualifications under Roth IRA plans.  Consult your tax advisor.

Other Roth IRA Advantages

Unlike traditional IRA’s and other tax qualified pension plans, Roth IRA’s have no contribution cut off ages or mandatory distribution ages.  Under the Roth IRA you can still make post age 70 contributions;

The Roth IRA can also provide a source of monies for a qualified higher education expenses, qualified first home purchase, certain major medical expenses; certain long-term unemployment expenses, disability; or substantially equal periodic payments.  There is a lifetime limit of of $10,000.

Comments & Suggestions

The Roth IRA has many of the same tax advantages afforded to investors who purchase non-mec Variable Universal Life Policieswithout contribution limits and distribution limitations.

Moreover, VUL policies can provide a death benefit value typically worth several times greater than the cash value.

Therefore, it could be argued that for younger investors, Variable Universal Life Policies might make better sense over the long haul.

Again, weigh your options carefully and consult with your tax advisor.


Action To Take

Click HERE to obtain Roth IRA information

For Faster Service Call 1-800-480-7526


 

 

 

 

 


Home.gif (1460 bytes)

Copyright 1998 Fielder Financial Management, LTD.
All Rights Reserved.

Securities and investment advisory services offered through Girard Securities, Inc. member FINRA, SIPC.
Fielder Financial Management, Ltd. not affiliated with Girard Securities, Inc.  Mark Fielder, OSJ, Registered Principal. CA. Insurance Lic. # 0690576.

Disclosure:  For more complete information about variable life, including charges and expenses, obtain a prospectus by calling 1-800-480-7526. Read it carefully before you invest or send money. Investment return and principal value of an investment will fluctuate.  An investors units, when redeemed, may be worth more or less than their original investment.  Consult your tax advisor.