THE BRIDGEWATER-SOMERVILLE CONNECTION PAGE 8 JUNE/JULY/AUGUST 2024 theconnectionsnj.com The key to your financial success shapirogrp.com Tailored Service, Disciplined Strategies, Committed Guidance. 30 Technology Dr., Warren, NJ 908-222-3770 info@shapirogrp.com Complimentary Initial Consultation Financial Planning Wealth Management Tax-Efficient Investing Services are best suited for clients with $1m+ of investable assets. Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Shapiro Financial Group is not a registered broker/dealer and is independent of Raymond James Financial Services. Asubstantial portion of today’s and future wealth is in individual retirement accounts, commonly referred to as IRAs. IRA accounts have grown, via annual contributions, rollovers from qualified plans, and compounding of investment returns. IRA accounts are titled in the name of an individual or as a beneficiary IRA. These accounts are never titled in joint ownership. IRA owners should pay particular attention to the beneficiary form attributable to the account. The beneficiary form will determine how the assets of the account are distributed, in the event of the account holder’s death. Although IRA assets are included in a decedent’s estate, IRA accounts are not administered by will or trust but rather by the beneficiary form. It is important to review your beneficiary form for life events and best to name both primary and contingent beneficiaries. There are 2 primary types of IRAs-traditional (deductible), which is funded pretax, and Roth, which is funded post-tax. In simple terms, an individual who contributes to a Traditional IRA receives a current tax deduction for annual contributions and the amounts grow tax-deferred. Distributions are taxable when taken. In contrast, Roth IRA contributions do not provide a current tax deduction, are viewed as utilizing after-tax dollars, and grow tax-deferred. However, Qualified Roth distributions are not subject to income tax. IRS rules for Qualified Roth distributions include distribution after 5 years and attainment of age 59 1/2. Hence Roth IRAs are characterized as tax-free growth. For 2024, annual IRA contribution limits are $7000 plus an additional $1000 for those 50 and older. If covered by an employer-sponsored plan such as a 401(K), you will be subject to limitations on annual IRA contributions. However, annual contribution limits to employer-sponsored plans are greater. Most 401(K) plans provide an employee option to contribute pre- or post-tax dollars. For 2024, employee contribution limits are $23,000 plus an additional $7,000 for those 50 and older. The selection of Traditional IRA versus Roth IRA, or pre-tax vs. post-tax, is a complex calculation. Further eligible individuals have a taxable option to convert traditional IRA assets to Roth IRA assets. At Shapiro Shapiro Financial Group we share a unique ability to carefully evaluate these choices for our clients. In part, we will consider participants’ needs, current and projected tax rates, asset allocation, age, net worth, and beneficiary. A well-constructed retirement plan potentially includes 2 buckets of retirement income, both taxable and nontaxable. Traditional IRAs are subject to Required Minimum Distributions (RMD). Beginning in 2023, the SECURE 2.0 Act raised the age at which you must begin taking RMDs to age 73. If you have already started taking RMDs, you will continue. Traditional beneficiary IRAs have separate distribution rules. RMDs are calculated using IRS tables which increase with age and are applied to prior year-ending balances. Traditional IRA distributions are taxable and should be well-planned. If you are philanthropic, you can donate your RMD up to $100,000 to charity, effectively reducing your taxes by lower adjusted gross income. We carefully calculate and monitor RMD administration for our clients. Traditional and Roth IRAs have grown to represent a sizable portion of investors’ wealth and retirement income. At Shapiro Shapiro Financial Group, we utilize 80 years of experience and the depth of Raymond James resources to construct personalized strategies for the current investor and generations to come. As a boutique firm, we provide personalized service to our clients. We believe that efficient tax management can add meaningful longterm returns. If you can benefit from professional investment management along with advanced financial planning, I invite you to contact me directly. I welcome the opportunity to help you and your family prosper. FINANCIAL FORUM The ABCs of IRAs By Robert Shapiro CPA, Financial Advisor Branch Manager-RJFS Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Shapiro CPAs is not a registered broker/dealer and is independent of Raymond James Financial Services. Required Minimum Distribu age at which you must begin tak
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