7 Ways an Excess IRA Contribution Can Happen to You

Excess IRA ContributionsNot all contributions to IRAs belong there. When a contribution is not permitted in an IRA, it is an excess contribution and needs to be fixed. Some excess contributions are easy to understand. Others may be a bit trickier to grasp. Here are 7 ways an excess IRA contribution can happen to you:

1. Blowing Past the Annual Limit

If you contribute more than the annual limit to an IRA for the year that will be an excess contribution. For 2018, the limit is $5,500 for those under age 50 and $6,500 for those who are age 50 or over. This may seem like an easy rule to follow. You may wonder who is go spouse’s taxable compensation to fund your IRA, you may not use a multitude of different income sources including social security, rental income and investment income. You may have a high income, but not be eligible to fund an IRA. If you go ahead anyway, the result is an excess IRA contribution.

Continue reading

Can You Contribute to a Roth IRA?

Roth IRA contributionNot everyone is eligible to make an annual Roth IRA contribution. We have seen several cases recently of individuals who contributed for many years until they discovered they were not eligible to make any Roth IRA contributions. Here is what you need to know.

First, you must have earned income in order to make a Roth IRA contribution. That means you must perform some type service to have earned income. Passive sources of income generally do not count. As a result, Social Security and payments from any type of retirement plan are not earned income. Rental income is generally not earned income. Investment income and interest income also do not qualify. Disability income will not qualify.

Many people think that if they have after-tax income they can put it into a Roth IRA. This is not true. Gains on the sale of a home or from investments cannot be contributed to an IRA just because they are after-tax funds.

Continue reading

10 Things to Know Before Moving Your IRA

Moving an IRAChange can be good. Is your IRA ready for a change? Maybe you are looking for a new type of investment or maybe a new IRA custodian. To change it up with your IRA, you may need to move your IRA funds. Here are 10 things you should know before moving an IRA.

1. The best way to move your money from one IRA to another is to do a trustee-to-trustee transfer. Your funds will not be distributed to you, instead they will move directly from your old IRA to the new IRA of your choice. Usually this can be done by requesting a transfer. Your current custodian will then send your IRA funds to your new IRA custodian.

2. A check made payable to a new IRA custodian for the benefit of your IRA but sent to you counts as transfer. Because the check is not made payable to you, you never have receipt of the funds. That is why it is still considered a direct transfer.

Continue reading

Catlett Earns the CFP® Certification

Cassandra CatlettCassandra Catlett, Financial Planning Coordinator with C&J Wealth Advisors, has earned the designation of CERTIFIED FINANCIAL PLANNER™ (CFP®). The CFP® certification is awarded by the Certified Financial Planner Board of Standards (CFP Board) in accordance with their certification requirements.

The CFP® marks identify those individuals who have met the rigorous experience and ethical requirements of the CFP Board, have successfully completed financial planning coursework, and have passed the CFP® Certification Examination covering the following areas: the financial planning process, risk management, investments, tax planning and management, retirement and employee benefits and estate planning. CFP® professionals agree to meet ongoing continuing education requirements and to uphold CFP Boards’ Code of Ethics and Professional Responsibility, Rules of Conduct and Financial Planning Practice Standards.

Continue reading

7 Mistakes to Avoid with Inherited IRAs

family inherited IRAAn inherited IRA can be a great thing for the beneficiaries. It is almost like winning the lottery or the Reader’s Digest sweepstakes. You get income for life, or do you? It is all too easy to miss out on this opportunity. The following apply to beneficiaries who are named on the beneficiary form. Beneficiaries who inherit through an estate or trust have different rules.

1.  Relying on the IRA Custodian – The company that is holding your inherited IRA will let you know what the best option is for you, right? Wrong. They are not required to give you any information. In fact, their only obligation is to issue the appropriate tax reporting for transactions that are made on the account, and many times they don’t even get that right.

Continue reading