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Retirees,dont make this dumb mistake!

Discussion in 'Non-Vegas Chat' started by jerseyguy, Feb 4, 2014.

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  1. jerseyguy

    jerseyguy VIP Whale

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    Thought we were be smart and contribute the max allowed for over 50's to our IRA'S. $6500 each so we thought we'd get a nice refund. Idiots we truly are ,you can only deduct IRA contributions against earned income meaning a job which means we cant deduct 1 cent. The worst part we found out is that you pay a yearly penalty ,almost$200 a year that this money stays in the IRA because it's considered an excess Ira contribution. To avoid this we have to withdraw all this money by april 15.
     
  2. nuggetboy

    nuggetboy Low-Roller

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    Jersey,
    You are correct. I will be retiring in 4 months and sat down with a rep from Schwab to discuss my Roth IRA Account a few months ago. I am retiring a bit early and still wanted to contribute to my Roth. He told me that as long as I had no "earned" income I could not contribute to the Roth. This was the last year i could contribute.
    There are a lot of rules related to these things and I would strongly suggest than any potential retiree sit down with a finance person for advice.
    I am glad I did. :licklips:
     
  3. shokhead

    shokhead I'm no big spender!

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    That's why you get a good investor that knows that stuff. If you used one then get a new one.
    In the end, that sucks.
     
    Here we go again!
  4. nickle

    nickle Low-Roller

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    Canadians contributing to RRSP's face similar rules about needing earned income and should check with a financial advisor (not a banker) if they have or are about to retire.
     
  5. jerseyguy

    jerseyguy VIP Whale

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    Most of our investments are self-directed

    Good or bad thats the way I prefer it. This was my own fault ,havent put any money in IRAS in quite a few years instead been taking out. I figured it was a good idea to put some back in and get a tax deduction . Live and learn.
     
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