Federal income taxes are fairly straightforward for most individuals during their working years. In a progressive income tax system like ours, you pay taxes at a certain rate. Once your income exceeds the top tier of that rate bucket, the next dollar you earn is paid at a higher rate.
Roth Conversions Are Amazing. Here's How They Work.
Roth IRAs have made a good run in their relatively short 23 year history. I join with millions of Americans in celebrating the fact that there is an instrument like these allowing workers to save and grow their after-tax dollars and never pay taxes on them again. It’s fitting that the creation of the Roth IRA fell under the Tax Relief Act of 1997.
Roth IRAs have many advantages (which I’ll highlight again); but what I’d really like to dive into is something called a Roth Conversion--where you convert traditional IRA funds into Roth IRA funds.
A New Law Just Made IRAs and 529s a Little More Interesting
As last year’s U.S. Congressional session approached the Christmas holiday, a little known bill called the SECURE Act was once again teetering on the edge of failure. However, at the last minute it was tacked onto the year-end appropriations bill in order to keep the government funded. Just like that, a new series of financial rules and requirements impacted millions of American’s financial lives, though most don’t even know about it.
Following is a brief rundown of the SECURE Act’s 1,000+ page rule, with a focus on the areas that I feel would most likely impact you.
The 401(k) vs. the Roth IRA. Which is Better?
Pitting retirement accounts against each other is not quite as thrilling a comparison as others, but the exercise is important as young families make plans for building future wealth.
Two of the most popular retirement accounts--401(k)s and Roth IRAs--are nearly identical in purpose but worlds apart in their composition.
In this post I’ve broken the main characteristics of 401(k)s and Roth IRAs into four categories. It’s impossible to make a true “apples to apples” comparison of these retirement accounts, but I hope this can get you a little bit closer and help your family make smarter decisions around your retirement.
How a Roth IRA Is The Ultimate Utility Knife of Most Financial Tools
Like utility knives, there are a few investment tools that are relatively simple in their design and extremely powerful in their effectiveness. One of these, without question, is the Roth IRA.Here are three attributes--utilities if you will--which make a Roth IRA such a powerful tool for families to build and use their wealth.