Not everyone knows everything about IRA plans. They can be a bit confusing, but if you avoid these mistakes, you can better prepare yourself for retirement. Here’s a sampling of things you should be aware of. Check out this article for more info.
You know you are allowed to contribute a certain amount each year to an IRA. Many people are unaware that you don’t need a separate IRA each year you contribute. In fact, the opposite is more beneficial. The lower the amount of retirement plans, the easier they are to manage. Open up one IRA, and contribute to it annually.
Another common mistake is that 401(k) plans are better than IRAs. Workplace 401(k) plans do offer good benefits like higher contribution limits and employer matches, however you are limited in what you can invest in. Also, fees are usually higher with 401(k)’s. This is especially true if you have a self-directed IRA, which allows you to invest in just about anything. With IRA Financial Group’s self-directed IRA LLC with checkbook control, you can invest in things like real estate, precious metals and tax liens, among other things that you can’t invest in elsewhere.
Many people don’t realize that you cannot take a loan from your IRA like you can with a 401(k). The only way you can get money out of an IRA without taking a distribution is when you rollover funds from one custodian to another. However, you only have 60 days to move that money or it will be treated like a distribution and you’ll owe the taxes on the amount and be subject to an early withdrawal penalty if you are under age 59 1/2.
Lastly, you think you can ignore the beneficiary designation forms when you open IRA. Heck, you’re still young right? No matter your age, it’s best to fill out the beneficiary forms right away. Not only should you have a primary beneficiary (such as your spouse), it’s best to have a secondary one (your child) as well. That way, if you pass, as does your spouse, you know the money will be left where you want it. No designation and your heirs could face a legal battle to receive your hard-earned money.
Opening and funding an IRA is just the first step to retirement happiness. If you don’t know all the rules to your IRA, you should contact a professional. The tax experts at the IRA Financial Group can help you decide your best course of action for your retirement planning. Give them a call @ 800.472.0646 or visit their website today!