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Beth A. Botti, CFP®, ChFC, CLU, CDFA™
Financial Consultant
California Insurance License #0G24537
612 Wheelers Farms Road, Milford, CT 06460
Phone: 203-877-6556 Ext. 169
Fax: 203-301-0736
Email: beth.botti@equitable.com
March/April 2019
Save Taxes Now or Later
As federal and state tax filing deadlines approach, you may naturally wonder how to minimize your taxes. Traditional and Roth IRAs are two options that may minimize your total tax bill for 2018 and beyond, and you can open one for tax year 2018 up to the tax filing deadline in 2019.
Traditional IRA
If you qualify by income, contributions* made to this IRA are tax-deferred. In 2018, contribute up to $5,500, indexed to inflation, and an extra $1,000 catch-up contribution if you are age 50 or older during any part of2018. The $5,500 annual limit, incidentally, applies to all contributions made to all of your IRAs. In tax year 2019, you can contribute even more — up to $6,000, plus the catch-up contribution if you qualify. Whether they contribute before or after tax, everyone can take advantage of any IRA’s tax-deferred potential earnings.
The current tax reduction can be considerable if you make a deductible contribution of $6,500 to a traditional IRA and are in the 30% combined tax bracket (state and federal taxes), saving $1,950 on your 2018 taxes. These savings add up over time and can benefit you in other areas — especially if you add the savings to, say, your 401(k) plan contributions or 529 plan
college savings.
Roth IRA
In contrast, a Roth IRA does not offer a current tax deduction for contributions, so you can’t reduce your 2018 tax bill by opening one. You will, however, find a number of advantages to this type of IRA account, not the least having to do with future taxes.Like a traditional IRA, the Roth offers tax-deferred potential growth. Unlike the traditional type, the Roth doesn’t mandate minimum distributions at age 70 1/2; you don’t even have to take a Roth distribution during your lifetime. The biggest advantage, however, is the tax-free nature of distributions if you are at least age 59 1/2 and have owned the Roth IRA five years or more.
Talk to Your Professional
Your financial professional can help you decide which type of account is right for you, but one thing is certain: Both types of IRAs offer a way to minimize taxes. It’s your choice whether to take advantage of this feature now or in retirement.*https://www.irs.gov/newsroom/irs-announces-2018-pension-plan-limitations-401k-contribution-limitincreases-to-18500-for-2018
GE-2258619a (10/18)(Exp. 10/20)
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Duly registered and licensed financial professionals offer securities through Equitable Advisors, LLC (NY, NY 212-314-4600), member FINRA,SIPC (Equitable Financial Advisors in MI & TN), offer investment advisory products and services through Equitable Advisors, LLC, an SEC-registered investment advisor, and offer annuity and insurance products through Equitable Network, LLC (Equitable Network Insurance Agency of Utah, LLC in UT; Equitable Network of Puerto Rico, Inc.). Equal Opportunity Employer - M/F/D/V. Equitable Advisors and its associates and affiliates do not provide tax, accounting, or legal advice or services. Representatives may transact business, which includes offering products and services and/or responding to inquiries, only in state(s) in which they are properly registered and/or licensed. Your connection to this website does not necessarily indicate that the sender is able to transact business in your state. The information in this website is not investment or securities advice and does not constitute an offer. For more information about Equitable Advisors, LLC you may visit https://equitable.com/crs to review the firm's Relationship Summary for Retail Investors and General Conflicts of Interest Disclosure.
GE-6572038.1 (4/24)(Exp. 4/26)
CFP®, and CERTIFIED FINANCIAL PLANNER™ are certification marks owned by the Certified Financial Planner Board of Standards, Inc. These marks are awarded to individuals who successfully complete the CFP Board's initial and ongoing certification requirements.
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