5 IRA Opportunities for You and Your Family

At Gleason Tax Advisory, we know that Individual Retirement Accounts (IRAs) offer significant potential for long-term financial growth. Here are five unique IRA strategies that may benefit you and your family, helping to boost your savings and reduce your tax liability.

1. Open an IRA for a Non-Working Spouse

Did you know that even if your spouse doesn’t work, they can still have an IRA? If you are employed and filing jointly, you may contribute to an IRA on behalf of your non-working spouse. This can be an effective way to reduce taxable income annually while building a solid retirement foundation for both of you.

2. Set Up an IRA for Your Child

If your child has earned income (even from babysitting or part-time jobs), they’re eligible for an IRA. Parents often match their child’s earnings with a contribution, setting up either a traditional or Roth IRA. Roth IRAs are often preferred for kids because future withdrawals may be tax-free, giving them a head start on tax-advantaged savings.

3. Combine Your 401(k) and IRA Contributions

Already have a 401(k) through work? You can still contribute to an IRA as long as you fall within the income limits. This allows you to diversify your retirement savings, maximizing growth potential and providing more options as you approach retirement. Understanding your limits and options helps ensure you’re saving efficiently.

4. Make Non-Deductible Contributions if You Exceed Income Limits

If you’re over the income phase-out limits for a deductible IRA, you can still contribute after-tax dollars to a non-deductible IRA. Although these contributions won’t reduce your taxable income, they’ll still grow tax-deferred, allowing you to save more over the years without the annual tax burden.

5. Use IRA Funds for Non-Retirement Expenses

While IRAs are designed for retirement, certain circumstances allow you to withdraw funds penalty-free before age 59½. These exceptions include costs for a first home, higher education, significant medical bills, and even birth or adoption expenses. However, knowing the rules before withdrawing is essential to avoid unnecessary penalties.

Making the Most of IRA Rules

Navigating IRA tax rules can be complex, but understanding these opportunities can significantly impact your financial future. The more you know about what’s available, the better you can make informed decisions that will set you and your family up for long-term success.