4 Very Common Mistakes Media, PA Investors Should Avoid When Opening An IRA

There are so many different messages coming out of DC, per the media, that if you try to make sense of it all through the mass media lens, then you’re bound to work at cross purposes with yourself.

There’s the Republican health care bill, and the current version of the bill is dominating political headlines.

Or, of course, there’s the initial budget being proposed by President Trump which is sure to make certain sectors, of my client base pretty happy.

Then again, there are the war drums being banged (once again) from North Korea …

Happy Spring, everyone!

But truly, if you subject yourself to media hysteria, you will make 1) poor financial decisions (because things ALWAYS change) and 2) you will remain in a state of continuous frustration and anger — because that’s what the media feeds on, no matter the political tilt.

I choose to “opt out” of the hysteria. While, of course, keeping my powder dry to respond to REAL issues in my life.

And YOU get the luxury of being able to trust that my staff and I are following all of the tax law changes as they come, and taking greatest possible advantage on your behalf.

Of course the tax law we’re currently using for return preparations has been “in the books” for quite some time now, so we’re not needing to make any rapid shifts these days. Just working the plan, and helping you save the most amount possible.

Speaking of savings… I see many IRAs set up this time of year, and of course, as we review our clients’ return information. But I also see some common mistakes, and I’d like to help you with those.

Let this be a “palate cleanser” from all the chaos, and let’s take a positive step towards saving WELL this week.

4 Very Common Mistakes Media, PA Investors Should Avoid When Opening An IRA
“Part of making good decisions is recognizing the poor decisions you’ve made and why they were poor.” -Warren Buffett

Opening an IRA for your retirement is almost always a good investment, but it’s not always a simple process. There are IRA alternatives (like a SEP, 401k, etc.)  that many of our clients know how to use (but you might not), there is the Roth option, and of course there are also the pitfalls that people fall into when setting them up. For example:

Not getting professional advice. 
Don’t try to do this on your own. Despite the many softwares, websites, etc. trying to lure you with the promise of saving money on commissions or other professional fees, those who work with a professional do tend to see better overall returns over time, for a number of reasons.  Not to mention the timely, expert advice they can provide when you need it — which you surely will from time to time.

If you are reading this post, whether as a client (or you’re considering still working with us) or someone passed it on to you, know that we are in your corner from the get-go for these sort of questions.

Naming the wrong beneficiaries, or not naming any at all. 
Making your minor child a beneficiary will require a court-appointed guardian to manage the money until the child turns 18. If you fail to name a beneficiary, it is likely the IRA will become payable to your estate upon your death. This unnecessarily subjects the IRA to estate taxes.

Confining yourself to the form. 
Most account agreements allow little space in which to name more than one beneficiary. With a little jiggering though (whether with an additional paper tacked to the initial paperwork, or by working the software a little) you can make sure to add the information of all beneficiaries, and exactly how you want the account to be distributed.

Thinking your financial institution keeps records of everything. 
In this age of mergers and acquisitions, who knows where your records could be? Keep copies of your account agreement and beneficiary designations, and let your professional and your family know how to find them.

And as I mentioned, we’re here to help. Let me know if you have any questions.

Warmly,

Jarrod Barton
(610) 285-9883
Senior Tax & Advisory Services