vs. Roth IRAs
types of IRAs are available to fund your retirement:
Traditional IRAs and Roth IRAs.
While both are subject to many of the same rules there are
several important differences. It's important to understand
these differences because the type of individual retirement
account (IRA) you choose can significantly impact your
financial future and that of your family.
Who Can Contribute to an
Any person with income from wages or self-employment can
contribute to an IRA (either traditional or Roth)--including
children as long as they meet the income conditions.
Individuals can contribute up to $5,500 in 2017. A catch-up
contribution of $1,000 is allowed for anyone over the age of
50, for a total contribution of $6,500. Contributions are also
allowed for stay-at-home spouses (up to $5,500 in 2017) as
long as the couple's wages or self-employment earnings total
at least $11,000.
cannot contribute to a traditional IRA if you are age 70
1/2 or older even if you (or your spouse, if filing
jointly) have taxable compensation. You can, however,
make contributions to your Roth IRA after you reach age
A traditional IRA does not have income limits; however,
contributions to a Roth IRA might be limited based on your
filing status and income.
For example, in 2017, if you file a joint return with your
spouse, you cannot contribute to a Roth IRA if your income (AGI
or adjusted gross income) is more than $196,000. However, you
may be able to contribute a reduced amount if your income is
greater than $186,000 but less than $196,000. For income below
$186,000, you may contribute up to $5,500 ($6,500 if age 50 or
older) or your taxable compensation for the year if your
compensation was less than this dollar limit. To figure the
reduced amount you can contribute, use the worksheet in
Publication 590-A, Contributions to Individual Retirement
Accounts (IRAs). Please call if you need assistance figuring
this out this amount.
Contributions to a traditional IRA are made pre-tax. As such,
they lower your taxable income, which could enable you to take
advantage of tax breaks you might not otherwise qualify for
with a higher income.
Contributions to Roth IRAs are made after-tax (i.e. you've
already paid the tax) and do not lower your pre-tax income.
Unlike a traditional IRA, however, you will owe no tax on
income from withdrawals made during your retirement.
Withdrawals before Age 59
Withdrawals from a traditional IRA that are made before the
age of 59 1/2 are subject to an early withdrawal penalty.
There are, however, several exemptions that allow you to use
the funds but waive the penalty. These include: Using IRA
funds to purchase your first home (up to $10,000) and using
funds to offset qualified higher education expenses, health
insurance premiums while unemployed, and unreimbursed medical
expenses in excess of 10 percent AGI.
Withdrawals from Roth IRAs may be taken out penalty and
tax-free before age 59 1/2 as long as they are contributions
(not earnings). Withdrawals that are earnings are subject to
the same 10 percent penalty tax as traditional IRAs. There is
an exception for qualified first-time home-buyers: A maximum
of $10,000 of Roth IRA earnings may be withdrawn penalty-free
to pay for qualified first-time home-buyer expenses as long as
at least five tax years have passed since your initial
Withdrawals after Age 59
Once you reach age 59 1/2, you may begin taking distributions.
While you are not required to take distributions at this age,
you must start taking distributions by April 1 following the
year in which you turn age 70 1/2 and by December 31 of later
years. With a traditional IRA, any deductible contributions
and earnings that are withdrawn (typically referred to as
distributions when you retire) are considered taxable income.
Income from Roth IRA distributions is generally tax-free and
unlike a traditional IRA, there is no age requirement for
distributions from a Roth IRA.
If you have any questions about traditional or Roth IRAs, don't hesitate to call. Help is just a phone call away at
SMEED CPA Adds Financial
Services To Help Clients With
Investments & Insurance
often we here at SMEED CPA are asked about financial issues
that impact our clients investments and their portfolios.
We always offered our opinion and suggestions but in order to
help our clients actually execute the changes we suggest,
SMEED has created a Financial Services division.
SMEED Financial Services, Inc. will be able to
work with both individual and business clients on their
investment portfolios and manage assets on their behalf.
SMEED Financial will include Michael Uadiale,
ACA, CPA, CGMA; and Pablo Blanco who has
recently joined SMEED and comes with over 18 years of
financial sales and advising experience with affluent
Watch your inbox and mail boxes for more specific information
on services SMEED Financial Services, Inc will make available
Would You Give Me Your
Feedback & Testimonial
on Our Hotline?
Hello it’s Michael Uadiale, CPA of
SMEED CPA Inc. We’ve just installed a toll-free
number that I would like for you to call and tell me how you
think we are doing as your CPA firm.
Just dial 800-609-9006
extension 3638 and follow the instructions. If we’ve
done a good job please let me know. And if we can
improve on anything, please mention that too.
Us Be Found on
Also as we expand our business,
we find more and more people are using
YELP and Google
to look for us by searching Brentwood accountant or
When they do this we want to
be FOUND on GOOGLE. One way you can help us
is to give us an
ONLINE REVIEW on our Google Maps/Places listing --->
or check us out at our YELP local listing
click here to go to our Google Listing for SMEED CPA and
click on the
YELP link to go there.
Scroll down to the Review area.
On either site it may say: Been here?
Rate and review
You will click on the Rate and
review link and then log in, then
give us a review!
You can choose between 1 and 5
STARS and write in what you think about the tax or accounting
work we have done for you.
It's that simple. Thank
you in advance for your help and cooperation!
As always you can call our offices if you have any
questions about these or any other accounting related issues, at
Regards, Michael Uadiale, CPA,
Managing Partner, SMEED CPA,