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Tips to get the most from an IRA

Filed Under: Your Finances on March 05, 2010

* There is still time for a 2009 IRA. If you didn’t
  make contributions to an IRA in 2009, you can still
  set up and contribute to an IRA for 2009. The deadline
  for doing so is April 15, 2010. An IRA is a great way
  to save for your retirement, and with a deductible
  IRA, you also cut your current tax bill.

* If your 2009 deductible IRA wasn’t fully funded by
  December 31, 2009, and you make any IRA contributions
  prior to April 15, 2010, designate to the bank or
  trustee that these 2010 contributions are for 2009
  (up to the maximum allowed). You can then deduct
  these amounts on your 2009 income tax return for a
  quicker tax benefit.

* Make your 2010 IRA contributions as early this year
  as possible to maximize the time you have for
  tax-deferred growth in the fund.

* Consider converting a traditional IRA to a Roth IRA
  this year. The previous rule that excluded taxpayers
  with incomes over $100,000 from doing a conversion to
  a Roth is eliminated as of January 1, 2010. You’ll
  have to pay tax on the amount converted, but
  qualifying distributions from the Roth IRA are
  tax-free thereafter. Furthermore, you won’t have to
  take annual distributions from your Roth IRA when you
  reach age 70½ if you don’t want to.

* Note that while converting a traditional IRA to a Roth
  IRA is now open to everyone, regardless of income,
  contributing to a Roth IRA is still not allowed for
  higher-income taxpayers. For 2010, Roth IRA
  eligibility phases out for singles once income reaches
  $105,000 and for joint filers once income reaches
  $167,000.

* For 2010, annual minimum distributions from most
  retirement plans are once again required for those
  aged 70½ and older. In 2009, these required minimum
  distributions (RMDs) were suspended. 2010 required
  distributions must be taken by December 31, 2010.
  Taxpayers who turn 70½ in 2010 may choose to delay
  taking their first distribution until April 1, 2011.

For additional information or assistance with IRA
decisions, give us a call.

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