Darcy Bergen Discusses The IRA Rules Everyone Should Know About in 2019
Darcy Bergen
The Maximum Contribution
In 2019, individuals can contribute $6,000 a year and $7,000 if they’re 50 or older. This is a jump from the 2018 numbers of $5,500 and $6,500.
It’s Possible for Individuals to Contribute to Roth and Traditional IRAs the Same Year
Individuals who qualify for both types of IRA accounts can make contributions to both in the same year. However, they need to ensure their combined contributions don’t exceed the annual limit.
After 70 You Can’t Contribute to a Traditional IRA
While a Roth IRA allows individuals to continue making contributions to their accounts for as long as they can, a traditional IRA doesn’t work the same way. Once a person turns 70½ the IRS prohibits them from continuing making contributions to their traditional IRA.
Individuals Can Contribute to Their 401(k) and a Traditional IRA the Same Year
Those who are enrolled in a 401(k) plan with their employer can also make contributions to their IRA account. However, Darcy Bergen wants to make sure individuals know the contribution cannot exceed the annual limit.
No Minimum is Required When Opening an IRA
Some individuals don’t open an IRA account because they don’t believe they have the funds necessary to do so. However, there are no specific rules that specify a minimum amount to open an IRA. Brokers often set the minimum amount to open an account.
Roth and Traditional IRAs are Not Created Equal but Serve a Similar Purpose
Darcy Bergen also sees a lot of confusion when it comes to traditional and Roth IRAs. For starters, in a traditional IRA, an individual can make deductions on the income when filing their federal and state taxes. The money will be subject to taxes once the individual retires. Roth IRAs, on the other hand, don’t qualify for deductions but the money is tax-free upon withdrawal.
For more of Darcy Bergen’s financial tips and IRA information, check out darcybergen.co.
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