By Jeff Chernitzer, CPA, PFS,, Wealth Advisor at Buckingham Strategic Wealth

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. However, effectively managing an IRA 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 you to make tax-deductible contributions (based on your income), meaning you can lower your taxable income now and pay taxes when you withdraw the money in retirement. On the other hand, Roth IRAs require after-tax contributions, but your withdrawals in retirement are tax-free. Choosing the correct type of IRA depends on your current financial situation and future expectations.

 

To get the most out of your 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 your investments to grow over time, benefiting from the power of compounding.

 

Once you reach retirement age, knowing when and how to withdraw from your IRA can significantly impact your financial security. Currently, Required Minimum Distributions (RMDs) must begin at age 73 for Traditional IRAs, and failing to take RMDs can result in hefty penalties. Roth IRAs do not have RMDs during the owner's lifetime, offering more flexibility.

 

In navigating the complexities of IRAs is easier with the guidance of financial professionals. This is where the Tidewater Jewish Foundation (TJF) comes into play. TJF collaborates with your CPA or wealth manager to provide personalized advice that aligns with your 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 they hit age 70 ½. By leveraging TJF's expertise, you can ensure your IRA supports your retirement and contributes to causes that are meaningful to you.

 

The Tidewater Jewish Foundation is dedicated to helping individuals and families achieve their philanthropic objectives. By working with TJF, you can integrate charitable giving into your financial plan, ensuring your legacy supports the Jewish community and other important causes. TJF's partnership with you and your CPA or wealth manager ensures that your IRA contributions and withdrawals are strategically planned to maximize benefits and minimize taxes.

Effectively using your IRA requires a combination of regular contributions, strategic withdrawals, and professional guidance. By partnering with the Tidewater Jewish Foundation and your financial advisors, you can ensure that your IRA secures your retirement and leaves a lasting impact on the causes you cherish. For more information on how TJF can help you with your IRA and philanthropic planning, contact Naomi Limor Sedek, President and CEO, at 757-965-6109 or nsedek@tjfva.org.

 

About the Author:

Jeff Chernitzer is a CPA and Personal Financial Specialist with over 35 years of experience in the financial planning industry, specializing in providing comprehensive financial and tax planning services to individuals, families, and nonprofits.