Taking a closer look at the Roth IRA

Wouldn’t it be nice to have an account available to you where you can put money in and:

  • Earn a higher interest rate than a traditional bank savings account
  • Pull your money out when you need it without [IRS] penalties
  • NOT be forced to have to take the money out when you’re 70 ½ (and still be able to contribution after 70 ½)
  • AND….Be TAX FREE to you in retirement and/or when passed along to your beneficiaries at your death?

If you’re looking for any of these options, then a Roth IRA may be your best option!

Roth IRA Basics:

  • Contributions are made with after-tax funds and a not deductible (like Traditional IRAs)
  • You can make contributions after 70 ½ (so long as you have earned income)
  • There is not Required Minimum Distributions on Roth IRAs, so you can leave amounts in your account as long as you live
  • Qualified Distributions are Tax-Free!

Now, not *everyone* can contribution to a Roth IRA. However, if your AGI is less than $193,000 and you’re filing Married Filing Jointly, OR less than $122,000 and you’re filing Single, Head of Household, or Married Filing Separately and did NOT live with your spouse at any time during the year, than you can contribute the full limit of $6,000 ($7,000 for those 50 and over) for 2019.

Over these limits you will either have a reduced amount you can contribute OR not be able to contribute at all. Also, contributions limits to Traditional IRAs and Roth IRAs are aggregate, so you can only do a TOTAL of $6,000 ($7,000 for 50 & over) between IRA and Roth if you happen to be contributing to both types of plans. (check out IRS publication 590-A for further information)

What makes a Distribution a “Qualified Distribution”?

  • Distributions made after the 5-year period from the first taxable year in which a contribution was made to set up a Roth for your Benefit. (Note: the clock starts ticking then and does not restart if you change/switch accounts or open another Roth IRA somewhere else)
  • The payment/distribution is:
    • Made on or after age 59 ½
    • Made because you are disabled (defined by the IRS)
    • Paid out as a Death Benefit to your Beneficiary(ies)
    • Meets the requirements listed by the IRS under their First-Time Home buyer exception (up to $10,000 per buyer)

If your distribution does not meet any of the options listed above, the GAINS on the Roth IRA are taxable and assessed a 10% pre-mature distribution penalty by the IRS. One very important thing to note is the taxation and subsequent additional 10% tax penalty is on the GAINS of your Roth IRA only. Contributions are NOT TAXABLE to you because you’ve already paid taxes on them. Additionally, those contributions are what come out FIRST when you take a distribution, so you are able to withdraw funds from your Roth IRA if you need to UP TO your total contributions with no tax consequences or IRS penalties.

Setting up a Roth IRA is Simple and Easy!

You do not have to contribute the entire $6,000 to establish a Roth IRA. You can start a Roth IRA for as little as about $50 per month. (That’s $12.50/week or about the cost of a Dunkin Donuts Coffee per day!) You have a ton of account options to choose from, so you can find the investment that fits your individual need. Plus, setting it up for automatic contributions each month will help you to “set it and forget it” and stay on track for your retirement goals!

Here’s to a Tax-Free Retirement!

Kara Stanley Earns Retirement Income Certified Professional® (RICP®) Designation


Kara Stanley Earns Retirement Income Certified Professional® (RICP®) Designation

Pembroke, NH – October 1, 2016 – Kara Stanley of Kara Financial, LLC has earned the Retirement Income Certified Professional® (RICP®) professional designation from The American College of Financial Services, Bryn Mawr, PA.

Candidates for the RICP® designation must complete a minimum of three college-level courses and are required to pass a series of two-hour proctored exams. The must also have three years of experience, meet stringent ethics requirements, and participate in The College’s continuing education program.

The RICP® educational curricula is the most complete and comprehensive program available to professional financial advisors looking to help their clients create sustainable retirement income. The rigorous three-course credential helps advisors master retirement income planning, a key focus area not fully covered in other professional designation programs. Fore retirement portfolio management techniques and mitigation of plan risks to the proper use of annuities, employer-sponsored benefits and determining the best Social Security claiming age, the RICP® provides a wealth of practical information for advisors.

Using the most current techniques, RICP® identify retirement income needs and objectives and evaluate a client’s current situation relative to those goals. Individuals who earn a RICP® can provide expert advice on a broad range of retirement topics including income needs and objectives, estate issues and other risks to the retirement income planning, Social Security, health insurance and housing decisions, and income taxation.

Kara has over 20 years of experience and expertise in the field of Insurance, Annuities, and Planning. She has a specialty in the 403(b) market, Future Planning for Families with Special Needs Children, Estate Planning, and Small Business Retirement Planning. She also achieved the designation of Chartered Retirement Planning Counselor® (CRPC®) from the College for Financial Planning in February, 2001. Kara spends time volunteering in many aspects of her community, both professionally and personally. She is a Past President of the NH Chapter of the National Association of Insurance and Financial Advisors (NAIFA-NH) and currently serves on Family Support Council for Lakes Region Community Services. Kara is also a Coach of her local Special Olympics team, the Winnipesaukee Warriors.

The American College is the nation’s largest non-profit educational institution devoted to financial services. Holding the highest level of academic accreditation, The College has served as a valued business partner to banks, brokerage firms, insurance companies and others for over 86 years. The American College’s faculty represents some of the financial services industry’s foremost thought leaders. For more information, visit TheAmericanCollege.edu