Retirement

In today’s economy, it is important to know the latest options available for planning for retirement. Recent and upcoming regulations are making saving for your future more profitable than ever before. With this knowledge in your tool belt, you can make the most of your investments.

Investments and Retirement. Photo by Rajeev Nair (CC by 2.0)

As of April 2017, financial professionals will be required by the US Department of Labor to act in your best interests when it comes to investment recommendations for a 401(k) or IRA. This means that they must make suggestions that work best with your personal financial situation, not merely what will make them the most money. This concept is known as a fiduciary level of care. Included in this standard is that financial advisors be required to disclose any potential conflicts of interest. Though the regulation only applies to retirement accounts specifically, you can always ask and advisor to act as a fiduciary on other types of taxable investments.

IRA tax-free charitable contributions have also recently changed due to a December 2015 appropriations bill. Once a temporary feature on many IRAs, they have now become a permanent fixture. Most traditional IRAs require withdrawals after age 70.5, even if the individual does not require that money. These distributions usually count as taxable income. However, if all or part of the money is donated to charity, these taxes can now be potentially avoided completely.

The myRA is a new type of retirement account that has been available since November 2015. Designed for people who do not have access to a 401(k), this type of account allows investors to contribute up to $5,500 a year, and $6,500 at age 50 and above. Currently, the only investment option available is a Treasury bond that is guaranteed not to lose value.The money can also be transferred to a private Roth IRA at a later point in time.

Speaking of Roth IRAs, the income limits for eligibility on these accounts increased by $1,000 in 2016. Deposits for Roth IRAs are made after tax dollars but the earnings are not taxed in a given year. This means that they can save you money in taxes in the long term. And after age 59.5, withdrawals from accounts over five years old are tax-free.

2016 is also a good year for qualifying for the saver’s credit on your tax return. The credit is designed to benefit low to middle income workers saving for retirement, and can be worth between 10 and 50 percent of the amount you put away.The adjusted gross income cutoffs have been raised to $30,750 for individual filers, $46,125 for heads of households, and $61,500 for people filing as couples. The saver’s credit can be claimed in addition to various other deductions applied to retirement accounts.

Ahrens Investment Partners always provides the best information to its clients. You can trust our financial advisors to act independently and free of conflicting interest. Taking advantage of our advice can mean a bright future for your retirement plans.