Money Management & Retirement Planning Advice by Barry Unterbrink, Chartered Retirement Planning Counselor

Thursday, April 05, 2012

Retirement (I.R.A.) Deadline Looms


I.R.A. and Retirement Plan deadlines in two weeks !

At this time, it's probably a good bet that you're working away at your income taxes. Every year, it seems like an increasing chore to get all the papers in order, then decide if you can get-r-done yourself, or hire a tax preparer to make the numbers "dance" - while hoping for a nice refund.

In all this paper-shuffling, let's not forget the "free lunch" (well-almost) that the tax code offers us; contributing to or establishing a retirement account to lessen our taxable income. This year's deadline for the 2011 tax year IRA contribution is April 17th*, fast approaching. A prior blog covered some of the account growth you could achieve by regularly contributing  to your retirement account every year. You can view that at: http://moneyruminations.blogspot.com/2008_03_23_archive.html The IRA contribution limits are $5,000 per year, and $6,000 for those over age 50.

A few additional actionable points on this topic that may help you:

* Run your tax return with and without the IRA contribution to see how much you will save in taxes, then determine if it is worthwhile to contribute to 2011, or to designate 2012 for the pay-in. You can contribute to both years from January 1st thru April 17th) If your income was low (out of work, etc.) in 2011, you may wish to split your contribution into 2011 and 2012, depending on your income forecast for 2012.




* Consider borrowing money. If the tax savings are significant, consider a loan or even credit card advance to fund your contribution. For example, if you can borrow at 12% for one year, and you income is taxed at 20%, you would be $240 to the good by making that $3,000 contribution. Get the calculator working, or ask your tax preparer. You must then be disciplined to repay your loan on time. If you're due a refund, use it to fund your IRA for 2012.

* Do an IRA beneficiary check-up. Call your bank, brokerage, or insurance company and verify that your beneficiaries are set up correctly and to your wishes. Marriages, divorces, and other life changes may have been overlooked when your originally opened the account.

* Thinking smaller. As long as you have earned income, you can contribute to an IRA, subject to some high income thresholds if your employer covers you in their plan. Many brokers and insurance companies will allow you to start with a couple hundred dollars, then add to it when you can. $39 a week saved would be $2,028 a year into your tax-deferred IRA account. Work with what works best for you.

Give me a call should you require further advice on this topic, or to open or transfer your IRA account.

Barry Unterbrink
Chartered Retirement Planning Counselor
(954) 719-1151

 * non-IRA's may have different deadlines.

An uncle I would like to dis-inherit.

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