Individual Retirement Accounts (IRAs) can be a popular vehicle for retirement planning, offering a reliable way to save for the future while enjoying tax advantages. Effectively managing an IRA, however, requires understanding its benefits and partnering with the right professionals to maximize its potential.
IRAs come in various forms, but the most common are Traditional IRAs and Roth IRAs. In general, traditional IRAs allow individuals to make tax-deductible contributions (based on income), meaning it is possible to lower taxable income now and pay taxes when the money is withdrawn in retirement. On the other hand, Roth IRAs require after-tax contributions, but withdrawals in retirement are tax-free. Choosing the correct type of IRA depends on one’s current financial situation and future expectations.
To get the most out of an IRA, it’s crucial to contribute regularly and up to the maximum the IRS allows. For 2024, the contribution limit is $7,000, with an additional $1,000 catch-up contribution allowed for those aged 50 and above. Regular contributions allow investments to grow over time, benefiting from the power of compounding.
Once retirement age is reached, knowing when and how to withdraw from the IRA can significantly impact financial security. Currently, Required Minimum Distributions (RMDs) must begin at age 73 for Traditional IRAs. Failing to take RMDs can result in hefty penalties. Roth IRAs do not have RMDs during the owner’s lifetime, offering more flexibility.
Navigating the complexities of IRAs is easier with the guidance of financial professionals. This is where Tidewater Jewish Foundation comes into play. TJF collaborates with a donor’s CPA or wealth manager to provide personalized advice that aligns with their individual financial goals and philanthropic interests. For example, currently an individual can give up to a total of $105,000 a year to charitable organizations, once hitting age 70 ½. By leveraging TJF’s expertise, a donor can ensure their IRA supports their retirement and contributes to causes that are meaningful to them.
Tidewater Jewish Foundation is dedicated to helping individuals and families achieve their philanthropic objectives. By working with TJF, donors can integrate charitable giving into their financial plan, ensuring their legacy supports the Jewish community and other important causes. TJF’s partnership with the donor and their CPA or wealth manager ensures that their IRA contributions and withdrawals are strategically planned to maximize benefits and minimize taxes.
For more information on how TJF can help with an IRA and philanthropic planning, contact Naomi Limor Sedek, Tidewater Jewish Foundation president and CEO, at 757-965-6109 or nsedek@tjfva.org.
Jeff Chernitzer is a CPA and personal financial specialist at Buckingham Strategic Wealth. He has more than 35 years of experience in the financial planning industry, specializing in providing comprehensive financial and tax planning services to individuals, families, and nonprofits.
Effectively using your IRA: A path to financial security and philanthropy
