10 Tips for Getting More out of Your IRA

The effectiveness of an individual retirement account (IRA) can be maximized through a combination of strategic planning and careful decision-making. Market

Watch.com columnist Robert Powell relates strategies in particular that professionals say investors should consider implementing.

Those strategies are:

  1. Consolidate Accounts: If you have multiple accounts, consolidating them can help you avoid (or at least reduce) maintenance fees, simplify your record-keeping and give you a clearer picture of your investments.
  2. Pay Attention to Allocation: Review your investments to ensure they match your allocation goals. Also, place your least tax-efficient assets, such as corporate bonds, in your tax-deferred accounts.
  3. Tax Diversify: Use both a traditional and a Roth IRA to reduce your tax bill and give you more flexibility over the amount and timing of withdrawals.
  4. Convert to a Roth IRA: Consider converting to a Roth IRA to better manage your aftertax income.
  5. Fund Both an IRA and a 401(k): Retirement savings can be boosted if contributions are made both to a 401(k) retirement plan and an IRA.
  6. Use Catch-Up Contributions: Investors age 50 or older can contribute up to $6,000, depending on their income, to an IRA or Roth IRA.
  7. Fund the Non-Working Spouse’s Account: Couples who file joint returns can contribute up to $5,000 ($6,000 for a spouse age 50 or older) into the non-working spouse’s account. This means married couples could contribute up to $12,000 per year, subject to age and income requirements.
  8. Withdraw From the Right Account: After taking the required minimum distribution (RMD), take money out of your taxable accounts before touching your IRA accounts.
  9. Leave a Legacy: Consider leaving tax-qualified assets to a charity.
  10. Consider Inheritance: An inherited or beneficiary IRA can provide tax and monetary benefits to your heirs.

Source: “10 Ways to Get the Most Out of Your IRA,” by Robert Powell, MarketWatch.com, February 21, 2012.


Discussion

Leslie from California posted 7 months ago:

Any thoughts about keeping accounts under 500k for SIPC reasons?


Charles Rotblut from Illinois posted 21 days ago:

The contribution limit for 2014 is $5,500 ($6,500 if you are age 50 or older). Spouses can contribute spouse's as much as $11,000 ($12,000 if only one person is age 50 or older or $13,000 if both are age 50 or older).

-Charles


James Hughes from Georgia posted 19 days ago:

The reason I diversified into so many mutual funds and IRA's is because of Wall St fraud. We now see they have pushed it into the EU and have propagated it into emerging markets. It has not been just a matter of "If you got bailed out you don't know how to do banking." It was with malice aforethoiught,see "Thirteen
Presidents" and Lawrence Summers, plus the Wall St settlements of the last 12 months. Why should mutual funds and ETF's be immune from the ... people? We need more discussion about the need to stop diversification in IRA's.


You need to log in as a registered AAII user before commenting.
Create an account

Log In