The Backdoor to Making a Roth IRA Contribution

Here's a little secret...there's a backdoor. If you decide to read this, get ready to have Aerosmith and Van Halen song lyrics running through your head all day. You've been warned. Contributing to a Roth IRA directly is a privilege reserved for those below a certain income level. (Those darn politicians and their tax breaks for the middle class.) The Roth IRA income limitations state that if you made over $125,000 as a single filer, or over $183,000 as a … [Read more...]

Excess Roth IRA Contributions: Does My Brokerage Keep Track of Income Limits?

According to the IRS's Roth IRA income limitations, if you plan to file married filing jointly and make $183,000 or over in Modified Adjusted Gross Income (MAGI) in 2012, then you cannot make contributions to a Roth IRA. Many dual income households are now staring down this Roth IRA limit. Such is the case of this PT Money reader who asks: I am considering opening a Roth IRA account with an online broker, but I have a few tax questions first. If I make some stock … [Read more...]

Retirement Withdrawal Strategies: 4% Rule vs The Bucket Method

One of the most nerve-wracking aspects of nearing retirement is the prospect of possibly running out of money in your golden years. Even if you have been the most diligent of savers, mismanaging your withdrawal of retirement income could have disastrous consequences. There are two main strategies for retirement income withdrawal: systematic withdrawal and bucket withdrawal. It pays to understand the pros and cons of each of these … [Read more...]

What is the Minimum Income to File Taxes in 2019?

It's that time of year when people begin wondering whether they need to file a federal income tax return. When in doubt, I say go ahead and file your return. (They are due April 15, 2019 and we recommend TurboTax If you click this link and make a purchase, we earn a commission at no additional cost to … [Read more...]

Should I Rollover My 401k?

Every day someone leaves a job and asks, "should I rollover my 401k?" Most of the time, the answer is yes. If you recently left a job, you should probably rollover your 401k. But there is more than one way to answer this question if you look at it closer. The answer really depends on where you are rolling over that 401k to. There are many places to put your old 401k funds. You could roll it over into your checking account, a new 401k, a rollover IRA, or even … [Read more...]

9 Smart Ways to Spend Your Tax Refund

The April tax deadline will be here before you know it. Since you aren't living on this money on a day to day basis, this windfall can be used to better your situation.  Overall, I like to see people use their tax return to get ahead. This is a great time to build up your emergency fund, get out of debt, or put towards long term savings.  Related: How Long Will it Take to Get Your Tax Refund What to Do With Your Tax … [Read more...]

Stay Out of the 401k Penalty Box

Just like in hockey, there can be penalties with your 401(k). High sticking in the NHL will get you a minimum 2 minutes in the penalty box. Same rules apply for cross-checking. In more severe cases, the penalty can be doubled that. The bright side to all that is after the penalty time expires, you are allowed back on the ice to play again. Hopefully, with no harm to the team. In retirement planning, this is often not the case, especially when it comes to your … [Read more...]

Roth IRA Rules

The late Senator William V. Roth, Jr. It's beneficial to periodically review the Roth IRA rules to encourage you to save for your retirement and to ensure we're not missing any key pieces of information. Before we dive into the rules, let's look at some Roth IRA basics. What is a Roth IRA? Senator William Roth of Delaware would be proud. We're still loving his Roth IRA. The investments inside the account may have taken a hit, but the idea behind the account … [Read more...]

9 Badass States Without State Income Taxes (and How They Get Away with It)

As the federal tax filing deadline looms closer and closer, many people are starting their federal tax returns. For an unfortunate lot, a state income tax return is due as well. (Here's our list of the best places to get your taxes done) Most states within America have a personal state income tax, though not all of them. And, several of those that do not impose a personal state income tax have other ways of eliciting revenue from their citizens. States … [Read more...]

Do I Have to Pay a Tax on Unemployment Compensation?

Do I have to pay a tax on unemployment compensation? The IRS isn't about to let the fact that you don't have a job stop it from collecting taxes from you. You are required to pay taxes on any income received. That includes the income you receive in the form of unemployment compensation. And, of course, if you were employed for part of the year, you will have to pay income taxes on that money as well. The good news is that your employer likely automatically … [Read more...]

How to Fill Out a W-4 Form (Without Errors that Would Cost You)

When your life situation changes and/or a new year rolls around, it's a good idea to revisit the amount of money that is being withheld from your paycheck for taxes. This is done by filling out a Form W-4. It's been a while since I had to complete a W-4 Form for an employer, but I will try to explain how the W-4 Form works and how to determine those crazy allowances. What is a W-4 Form? The Form W-4 is simply a form created by the IRS to help your employer … [Read more...]

How to Rollover a 401k to an IRA

Leaving your corporate gig can be a good or bad thing depending on your particular situation. One thing though that's usually a positive when this happens is that you get to move your 401K funds into an IRA. The 401K rollover to IRA, sometimes called a 401k IRA rollover or 401K to Rollover IRA is a common move people make when they leave their job. If you've been fired or you quit your job, you have the option to roll your 401K funds over into what's known as a … [Read more...]