You have until April 15, 2021, to contribute to an IRA for the 2020 tax year.
There are two key reasons to invest in an Individual Retirement Account (IRA): to save for a more secure future and gain potential tax savings today.
Money is never easy to come by, whether you’re in the early stages of your career, flourishing in your earning power, or moving on to your golden years. But to maintain your current lifestyle, experts say you’ll need 70 to 80 percent of your pre-retirement income. And to reach this amount, most of us will need to rely on more than one income source during retirement years. It may be from your employer-sponsored 401k, a pension, outside investments, as well as social security.
However, an IRA is one more nest egg that can serve as an excellent income supplement. And early preparation is vital — the sooner you start, the more you’ll benefit from the compounding of interest. With lucrative investment amounts available, you’ll see your investment grow over time, ready when you need it.
For 2020, your total contributions to traditional and Roth IRAs can be up to:
- $6,000 ($7,000 if you’re age 50 or older), or your taxable compensation for the year, if your compensation was less than this dollar limit.
With an IRA, you not only set extra money aside for retirement, but you also reduce your tax burden today. See your tax advisor and see precisely how a contribution can impact your tax situation.
A Roth IRA and 529 Education Plan have unique benefits from a traditional IRA.
- Roth IRAs offer dividends that grow tax-free, and a 529 Plan is a prepaid tuition strategy with the potential of much higher contribution limits. Both have versatile uses depending upon your unique financial goals.
Let us show you the benefits of opening an IRA and outline the benefits of each. We also recommend that you contact your tax advisor to see how an IRA can benefit your tax situation and retirement goals.
Call or text us at 616.532.9067 to learn more. We can help you get started – in time for the 2020 tax season.