Continued jitters over trade tensions, a partial government shutdown, a slowing global economy
Slowing Down — The median sales price of existing homes sold nationwide increased 3.8 percent on a year-over-year basis through October 2018. That’s the smallest year-over-year growth in the median sale price since March 2012 (source: National Association of Realtor, BTN Research).
Not Ready — Thirty states do not have sufficient reserves set aside today to absorb the financial impact of an economic recession, forcing them to raise taxes/fees or reduce benefits (source: S&P Global, BTN Research).
More Out Than In — The total cost of the Social Security program in 2018 ($1.003 trillion) is projected to exceed its total income ($1.001 trillion), resulting in the program’s first deficit since 1982 (source: Social Security, BTN Research).
WEEKLY FOCUS – Roth 401(k)s Versus Roth IRAs
Although a growing number of employers are adding a Roth 401(k) to their retirement plan offerings, the newer savings vehicle is still not widely understood. If your company provides this option or you’d like it to, the following information should prove useful.
The Roth 401(k) provides many of the same advantages a privately held Roth IRA does. Contributions to both accounts are made with after-tax dollars, grow tax-free and offer tax-free withdrawals during retirement. But the two have marked differences, including:
Income restrictions. There are no income restrictions when contributing to a Roth 401(k). To make the maximum contribution to a Roth IRA in 2019, a single filer’s modified adjusted gross income must fall below $122,000; a married couple filing jointly must have a combined income below $193,000.
Contribution amounts. Roth 401(k)s enjoy high contribution limits. In 2019, an employee can contribute up to $19,000, or $25,000 if they are age 50 or over – compared to up to $6,000 in a regular Roth IRA, with a $1,000 additional
Required minimum distributions. While there are no RMDs with Roth IRAs, distributions are typically required each year after age 70½ with Roth 401(k)s – unless the account holder is still employed by the company and doesn’t have an ownership stake in it.
Investment options. An individual with their own Roth IRA is free to choose investments, compared to a person limited to investments offered by their Roth 401(k).
Contribution deadlines. Generally, contributions to Roth 401(k)s must be made by the end of the year. But it’s possible to apply Roth IRA contributions to the current year if they’re made by the tax filing deadline in April of the upcoming year.
With the variety of retirement plans available today, it can be difficult to weigh each option’s advantages and disadvantages. Contact our office today for help determining which plan or combination of plans best suits your individual goals and circumstances.
The Dorion-Gray Team
Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. a Registered Investment Advisory Firm. Dorion-Gray Retirement Planning is a trade name of Dorion-Gray Financial Services, Inc. located at 2602 IL Route 176, Crystal Lake, IL 60014. Dorion-Gray and the Securities America companies are separate, unaffiliated entities.
Diversification seeks to reduce the volatility of a portfolio by investing in a variety of asset classes. Neither asset allocation nor diversification guarantee against market loss or greater or more consistent returns.
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