Contributing to an IRA (Individual Retirement Account) is a great way to build a strong foundation for the future. However, there are a number of pitfalls that can end up curtailing your efforts and shaving years of your hard-earned savings away. Here are some helpful tips to keep mindful of as you contribute to your IRA:
- The most significant factor in IRA saving is the amount saved, not the rate of return.
- Contributions for the 2014 tax year must be made by April 15, 2015.
- Both Traditional & Roth IRAs allow for an annual contribution of $5,500 in 2014.
- Singles earning over $129,000 and married couples filing jointly who earn over $191,000 cannot add to a Roth IRA.
- High earners can instead contribute to a nondeductible IRA, and then roll the account over into a Roth IRA.
- Failing to take the full amount needed starting at age 70 ½ can result in penalties of 50% of the deductible’s value.
Building the foundation for your financial future takes patience. Avoid these unnecessary pitfalls, persevere, and you will be sure to unlock a greater, more enjoyable retirement lifestyle when the time comes.