Dependable Retirement Planning Advisors

Brooklyn Park Retirement Planning

When we think about Brooklyn Park retirement planning, our first thoughts often gravitate towards 401k's and pensions. But there is another type of Brooklyn Park retirement planning account that can be a big asset to anyone in the Brooklyn Park area who is planning for retirement. IRA's are much like 401k's except they are not administered by a Minnesota employer.

What Exactly is an IRA?

IRA stands for Individual Retirement Account. They were created for the most part for those people in MN who are self-employed but still want to begin Minnesota retirement planning. There are four different categories of IRA Brooklyn Park retirement planning accounts. The most common (and the ones you have likely heard of) are the traditional IRA and the Roth IRA. The other two are called SEP IRA's and SIMPLE IRA's.

In order to best begin planning for your Brooklyn Park retirement you must first understand the difference between these account types. A pension, as you may know is an account created by, contributed to and maintained for an employee by his or her MN employer. A 401k is similar, except the contributions are either shared by the employer and employee (known as contribution matching or vesting), or completely made by the employee alone. IRA's are accounts set up and contributed to by a private individual in Brooklyn Park while being maintained by an outside MN firm. For the purposes of this discussion, we will concentrate on the traditional Minnesota retirement planning IRA account.

Traditional IRA's

A traditional Brooklyn Park retirement planning IRA account is probably the most important type to understand. The reason for this is simply because it is by far the most common retirement planning IRA, and therefore the one you are most likely to open. You should never start any Brooklyn Park retirement planning account without having at least a basic understanding of what it is and how it works.

A traditional IRA is similar to other types of IRA's in that it is basically a savings account that comes with tax breaks. However, in order to receive said tax breaks, you cannot touch the amount until you retire. Upon retirement there are still some taxes involved, but significantly fewer than there would be if you were not investing this amount into an IRA planning account. Depending on the account and your income, these tax breaks can vary in size. With a traditional IRA, there are two different types- deductible and non-deductible.

In regard to a Brooklyn Park deductible IRA, the tax you would normally pay on the portion of your income that you save in this account is deferred. In other words, if you make $50,000 per year, and invest $10,000 of that into a traditional Brooklyn Park IRA, your taxable income for that year is now $40,000. This is reflected and calculated on your annual tax return, and not at the time you make the investment.

Like anything else, you should receive a report at the end of the year (or the beginning of the next) that has all the information that you or your Brooklyn Park accountant might need in order to file your taxes correctly. In contrast, a non-deductible IRA is of course the opposite. With a non-deductible traditional IRA Brooklyn Park retirement planning account, you do not get a tax deduction at the end of the year. This information can seem confusing, but don't fret. There are very clear guidelines and once you understand them the process is simple.

If you are married and the combined income of yourself and your spouse is less than $89,000 you can contribute up to the annual limit that is set by the federal government and deduct that whole amount from your taxes. Because you can have both an IRA and a 401k, the rules on this get a little different when you have both. If you are married and your income (adjusted gross) is $88,999 or less you can still get the deductible. The same applies if you are single and make $55,999 or less. If your income is higher than the threshold, the deduction amount lessens progressively. Once your income goes higher than $108,999 (for jointly filing married couples), $9,999 (for married person who is filing separately), or $65,999 (for a single person) your traditional IRA Brooklyn Park retirement planning account becomes a non-deductible Brooklyn Park retirement planning account.

Just like with any tax deferred account in Minnesota , traditional IRA's do have restrictions on who can contribute to one (hence the need for 4 different types). However, a traditional IRA is restricted to any person or persons who are earning income that is taxable and under 70.5 years of age. The main restrictions in this type of account determine whether you can have a deductible Brooklyn Park retirement planning IRA account or a non-deductible one.

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Retirement Planners In Brooklyn Park

Wealth Enhancement Group
Wealth Enhancement Group
505 North Highway 169
Suite 900
Plymouth, MN 55441

Nate Pribyl
Nate Pribyl
9483 Garland Lane
Maple Grove, MN 55311

Jonathan Pyne
Jonathan Pyne
708 North 1st Street
Suite 342
Minneapolis, MN 55401

Jim Reynolds
Jim Reynolds
45 South 7th Street
Suite 2000
Minneapolis, MN 55402

Joe Schwarz
Joe Schwarz
50 South Sixth Street
#1405
Minneapolis, MN 55402

John Severy-Hoven, CFP, MBA
John Severy-Hoven, CFP, MBA
1595 Selby Avenue
Suite 213
Saint Paul, MN 55104

Alex Reader
Alex Reader
1960 Donegal Drive Suite 40
Woodbury, MN 55125

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