The IRS recently issued a very tax-friendly ruling for anyone taking after-tax money out of their 401(k) retirement plan. If you have after-tax money in your 401(k) retirement account, you can now roll it into a Roth IRA where it will then grow tax-free (as opposed to growing tax-deferred as it would in a traditional IRA).
With tax season fast approaching, remember that an easy way to reduce your taxes is to reduce your income. Contributing more to your 401(k) or IRA reduces your taxable income and your contributions grow tax-deferred, until you make withdrawals at retirement.
Among their many benefits, qualified retirement plans are protected from claims by creditors. However, the Supreme Court unanimously ruled last month that inherited IRAs are not retirement accounts and, therefore, not protected from creditors. The high court’s ruling agrees with several states that previously ruled that inherited IRAs are not retirement plans.
All things in moderation? Apparently, Americans ignore Ben Franklin’s sage advice when it comes to investing for retirement.
The early bird catches the worm – and, in the investment world, also potential for greater returns. Think about this: IRA investors can make IRA contributions any time from January 1 of the tax year to the following year’s April tax-filing deadline.