06-07-2018 Columns

Saying “I do” might mean “I can’t” for Roth IRA June is a popular month for weddings. If you are planning on tying the knot this month, it’s an exciting time, but be aware that being married might affect you in unexpected ways – including the way you invest. If you and your new spouse both earn fairly high incomes, you may find that you are not eligible to contribute to a Roth IRA. A Roth IRA can be a great way to save for retirement. You can fund your IRA with virtually any type of investment, and, although your contributions are not deductible, any earnings growth is distributed tax-free, provided you don’t start withdrawals until you are 59-1/2 and you’ve had your account at least five years. In 2018, you can contribute up to $5,500 to your Roth IRA, or $6,500 if you’re 50 or older. But here’s where your “just married” status can affect your ability to invest in a Roth IRA. When you were single, you could put in the full amount to your Roth IRA if your modified adjusted gross income (MAGI) was less than $120,000; past that point, your allowable contributions were reduced until your MAGI reached $135,000, after which you could no longer contribute to a Roth IRA at all. But once you got married, these limits did not double. Instead, if you’re married and filing jointly, your maximum contribution amount will be gradually reduced once your MAGI reaches $189,000, and your ability to contribute disappears entirely when your MAGI is $199,000 or more. Furthermore, if you are married and filing separately you are ineligible to contribute to a Roth IRA, if your MAGI is just $10,000 or more. So, as a married couple, how can you maximize your contributions? The answer may be that, similar to many endeavors in life, if one door is closed to you, you have to find another – in this case, a “backdoor” Roth IRA. Essentially, a backdoor Roth IRA is a conversion of traditional IRA assets to a Roth. A traditional IRA does not offer tax-free earnings distributions, though your contributions can be fully or partially deductible, depending on your income level. But no matter how much you earn, you can roll as much money as you want from a traditional IRA to a Roth, even if that amount exceeds the yearly contribution limits. And once the money is in the Roth, the rules for tax-free withdrawals will apply. Still, getting into this back door is not necessarily without cost. You must pay taxes on any money in your traditional IRA that hasn’t already been taxed, and the funds going into your Roth IRA will likely count as income, which could push you into a higher tax bracket in the year you make the conversion. Will incurring these potential tax consequences be worth it to you? It might be, as the value of tax-free withdrawals can be considerable. However, you should certainly analyze the pros and cons of this conversion with your tax advisor before making any decisions. In any case, if you’ve owned a Roth IRA, or if you were even considering one, be aware of the new parameters you face when you get married. And take the opportunity to explore all the ways you and your new spouse can create a positive investment strategy for your future. Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation. This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Enjoy free Michigan fishing, off-roading on June 9-10 This weekend, Michigan residents and out-of-state visitors can enjoy a free fishing weekend as well as a free off-road vehicle weekend and free entry into all state parks. Since 1986, Michigan’s annual Summer Free Fishing Weekend has offered an outstanding opportunity for Southwest Michigan families and out-of-state visitors alike to get together and enjoy some of the world’s best fishing on both inland and Great Lakes waters — at no charge. This year, anglers can fish without a license on Saturday and Sunday, June 9-10. All fishing license fees will be waived during the weekend, although all fishing regulations still apply. I encourage all area anglers, and those who have never gone fishing, to get out and take part in one of our state’s premier outdoor activities during the free weekend. For more information, including a list of activities across the state, visit www.michigan.gov/freefishing. Saturday and Sunday also mark one of the summer’s free ORV weekends, a time off-road enthusiasts can ride Michigan DNR-designated routes and trails without an ORV license or trail permit. Riders can find out more at www.michigan.gov/orvinfo. To encourage visitors to visit a state park during the two days, the state is waiving the regular entry fee that grants vehicle access to Michigan’s 103 state parks. From passing along the joy of fishing to the next generation to riding on 3,700 miles of ORV routes and trails to just enjoying time with family in one of our state parks, this weekend offers great opportunities for residents to have fun in our great outdoors. As always, I look forward to hearing your comments and feedback on the important issues facing Michigan. You can contact me at 517-373-6960.

Candidate’s breakfast June 20

The public is invited to attend a candidate’s breakfast at Pebblewood Restaurant, 9794 Jericho Rd. in Bridgman on Wednesday, June 20, at 8:00 a.m. The breakfast is hosted by the Berrien County Republican Women’s Club. All Berrien County Republican candidates who are running at the county level and above are being invited to attend and those who have contested races will be given time to speak. All others will be introduced. This is a good opportunity to meet the candidates and learn more about them. RSVP for $15 breakfast buffet requested by one week in advance and can be made by calling 982-9939.