widow(er)s earning a MAGI
above $191,000 annually
cannot contribute to a Roth
account.
Single taxpayers can earn a
modified AGI of $114,000 per
year and still fully contribute
to a Roth plan. A reduced
contribution is permitted
for singles earning between
$115,000 and $129,000 annu-
ally. Anyone earning a MAGI
above $129,000 is ineligible
to make deposits into a Roth
IRA.
Ruiz reminds people to keep
in mind that MAGI is not the
same thing as earned income;
the MAGI is calculated after
certain deductions are made to
a taxpayer’s income, such as
401(k) deferrals, cafeteria plan
contributions and flex plan
contributions which means
that more individual may be
eligible to contribute to Roth
IRAs.
In a nutshell, the differ-
ence between the two IRAs
(Traditional, and Roth) is, in a
Traditional IRA the taxpayer
may get a tax deduction for
contributions but distributions
will be taxed because the
interest and deductible contri-
butions have not been taxed
before. In comparison to the
Traditional IRA, Roth IRAs
have a tax-free distribution of
principal, and if requirements
are satisfied tax-free distribu-
tion of earnings as well. Ruiz
also hopes to increase the pub-
lic’s understanding that cash
and stocks are far from the
only assets that can be deposit-
ed into either type of IRA.
“We’re definitely heavy
in the real estate investment
world in The Entrust Group,”
Ruiz said.
subject to stringent in-
come level requirements
to determine deductibility.
Depending on what statistics
someone takes as gospel,
between 42 and 52 percent of
Americans with retirement
plans have traditional IRAs.
The other type of IRA is
the Roth IRA. Contributions
to a Roth IRA, established
under the Taxpayer Relief
Act of 1997 and named for its
chief legislative sponsor, the
late Senator William Roth of
Delaware, are ineligible for
tax deductions, according
to Ruiz. However, investors
following IRS guidelines with
withdrawals do not have to
pay taxes on the principal, as
well as any interest gained.
Only about 17.5 percent of
Americans with retirement
plans choose Roth IRAs,
which may be due to misun-
derstandings about the poten-
tial benefits of Roth accounts,
Ruiz said.
“I think what we have right
now is a lack of understand-
ing between the differences
of the two different types
of individual retirement
arrangements,” Ruiz said.
“Now, keep in mind that in a
Roth IRA there is an income
limitation that limits who
can actually make the annual
contribution. But the income
limits that we’re looking at
are not necessarily low-in-
come levels; they’re pretty
high-income levels, depend-
ing on which region of the
country we are looking at.”
As of 2014, a married
couple or qualifying wid-
ow(er) could earn a modi-
fied adjusted gross income
(MAGI) of $181,000 annually
and contribute to a Roth IRA.
In some cases, people with
an annual MAGI between
$181,000 and $191,000 can
make smaller contributions
to a Roth plan. Only those
married couples or qualifying
Realty411Guide.com
BIRMINGHAM, AL
v
For more information about
IRAs or other financial invest-
ments, call The Entrust Group
at 800-392-9653 or visit
http://theentrustgroup.com
PAGE 39 • 2014
reWEALTHmag.com