Hello, everyone! It’s that time of year again – a perfect moment to reflect on our financial journey, especially when it comes to planning for retirement. We're here today to guide you through some essential steps and strategies to optimize your retirement plans. Let's empower ourselves to make wise decisions that can define our financial future positively.
Are You Putting Money In?
Firstly, let’s talk about Individual Retirement Accounts, or IRAs. Choosing the right type of IRA is crucial. The two primary types are the Traditional IRA and the Roth IRA, each with its own tax implications.
With a Traditional IRA, your contributions are typically tax-deductible, and your investments grow tax-deferred. You only pay taxes when you withdraw in retirement. This can be a great option if you expect to be in a lower tax bracket after retirement.
On the other hand, a Roth IRA offers tax-free growth and tax-free withdrawals in retirement. While contributions are not tax-deductible, this account is ideal if you anticipate being in a higher tax bracket later on or prefer tax-free income during retirement.
Understanding contribution eligibility is key. Both Traditional and Roth IRAs have guidelines for regular, spousal, and catch-up contributions. For instance, if you're 50 or older, you can make catch-up contributions, allowing you to save more as you near retirement.
Is It Time to Take Money Out?
Now, let’s address when it's time to start withdrawing from your IRAs, as required by law. This involves Required Minimum Distributions, or RMDs.
RMDs are amounts you must withdraw annually from your retirement accounts, starting at a certain age. Here are the key points:
- If you were born before July 1, 1949, RMDs began in the year you turned 70 ½.
- For those born after July 1, 1949, RMDs start at age 72.
- The SECURE 2.0 Act of 2022 raised this age to 73 starting in 2023 for individuals born on or after January 1, 1951.
- Additionally, in 2033, the age will increase to 75 for those born on or after January 1, 1960.
Retirement planning is an ongoing journey, and it's never too late to make impactful changes.
Remember you can always go here in Radiant's Retirement Central to handle IRA transactions.
If you want to review or adjust your IRA strategies, we're here to help. You can reach out to us via call, email, or by visiting your nearest Radiant branch.
We're excited to provide you with any guidance and support you need.
