Fiscal Cliff Self Directed IRA

I watched with interest as the people we elected to represent us in Congress walked out of Washington last week with no answers as to how we as a country can avoid going over the Fiscal Cliff.

Nearly all taxpayers will be affected by the decisions made on government spending in some way. As an IRA Administrator, I like my clients, am concerned about where the government stands on the coveted 401 (k) plans and IRAs. There are 3.5 trillion dollars in IRAs alone.

With this in mind, here are 4 things we can do this year to help us take control of our financial future with our IRAs.

1. Consider an IRA-qualified charitable distribution.

People 70 ½ and older are required to take minimum distributions from their traditional IRAs. This year you can give up to $100,000 directly from your IRA to the charity of your choice. This will satisfy the RMD requirement and no taxes will be due on the amount of the contribution.

2. Consider converting a traditional IRA to a ROTH IRA.

Given the current low federal tax rate, you may want to consider locking in now and paying taxes while rates are still relatively low for most people. If you choose to convert later, you may be doing so at a higher rate.

3. Understand the benefit of Inherited IRAs.

They can help your beneficiary take distributions over the maximum period allowed by federal required minimum distribution (RMD) rules, and give your assets the potential to continue to grow tax-deferred for your heirs.

4. Have all, or at least some portion, of your IRA in a truly Self-Directed IRA account.

A diversified IRA portfolio is vital to the growth of your net worth. A truly self-directed IRA allows you to invest in alternative assets such as real estate, oil and gas, precious metals and other non-traditional stocks, bonds and funds. In order to this, you need an administrator/custodian who specializes in the record keeping of non-traditional assets to act on behalf of your IRA.

With the uncertainty of government and the upcoming decisions that will impact our finances, one of the last tax enhancements where we still have some control is the retirement plan. Make plans now to keep your IRA safe. Continue to monitor the coming changes and learn how these changes could impact your financial future.

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