At the start of the new year, it’s important for investors & IRA account holders to stay knowledgeable about any changes to the financial landscape that are coming in 2017. Every year, new rules and regulations are established by the IRS which dictate how account holders can direct both their IRA account and other retirement planning options. There are 4 upcoming changes that account holders should be aware of as they plan their financial needs and execute any direct action with their retirement savings.
- Financial advisors must give financial advisement in your best interest
Beginning for the first time in 2017, financial advisors who give advice to retirement account holders on their 401(k) or IRA are legally required to choose the investments that are in the best interest for the client as opposed to the most beneficial decisions for the advisor to profit. This new rule will protect account holders and holds the retirement account advisors accountable for only doing what’s best for the client, however it does only apply to retirement plans. In this new legal role as a fiduciary, IRA account holders can feel more secure in their investment decisions.
- IRAs now have higher income limits ceilings
Many working individuals have the opportunity save for retirement on a tax-deferred basis through both their work’s retirement plan (a 401(k), for example) and their IRA. There has always been an income limit on individuals saving in both types of account so that if they surpass a certain salary ceiling, they must phase out tax deductible contributions. Starting in 2017, individuals who earn $62,000 to $72,000, or $99,000 to $119,000 for couples, are included in this salary range that means if they have a 401(k) and IRA, they must phase out those tax deductible contributions to their IRA account. However, if retirement planners don’t have a 401(k) or other type of retirement account through work, contributions to their IRA can remain tax deferred regardless of their yearly income.
- Roth IRA accounts also have higher, new income limits
With Roth IRAs, individuals receive no tax deduction up front like traditional IRA’s, but if all the rules are followed, Roth distributions are tax free. For these accounts, the income limit is now phased out for individuals earning between $118,000 and $133,000, or $186,000 to $196,000 for couples.
- Charitable contributions from your IRA can now be tax deferred
Required minimum withdrawals are required with Traditional IRA account for individuals over 70 ½, which are subject to income tax. Due to a bill passed in 2015 however, if an account owner over 70 ½ makes part or all of their withdrawal as charitable contribution (up to $100,000) directly to a verified charity, they won’t owe any income tax on the withdrawal transaction. This is a smart way for individuals who don’t rely solely on their retirement savings for living to avoid a tax fee.
Understanding the details and yearly regulation changes involved with your retirement accounts is vital for an IRA account holder to make sound, informed decisions on their future. If you’re prepared to start saving for your retirement, call IRA Innovations today to open a self-directed IRA and take control of your retirement investing.