World Economic Forum: "Arguably the Most Exciting Human Discovery Since Fire"

Sam Altman, Bill Gates, and Mark Zuckerberg are all investing vast sums of money into a radical technology. According to Bloomberg, this could become 10 times bigger than AI, quantum computing, electric vehicles, cryptocurrencies, and robotics combined. And one stock is at the center of it all.

10 IRA mistakes to avoid

Christine Benz of Morningstar
March 25, 2025

From contributions to conversions to distributions, don't fall into these traps when managing your IRA.

Waiting until the 11th hour to contribute

Investors have until their tax-filing deadline--usually April 15--to make an IRA contribution if they want it to count for the year prior.

Many investors squeak in their contributions right before the deadline rather than investing when they're first eligible (Jan. 1 of the year before). Those last-minute contributions have less time to compound, and that can add up.

Assuming Roth IRA contributions are best

Funding a Roth instead of a traditional IRA may not always be the right answer.

For investors who can deduct their traditional IRA contribution on their taxes, and who haven't yet saved much for retirement, a traditional deductible IRA maybe better. That's because their in-retirement tax rate is apt to be lower than it is when they make the contribution.

Thinking of IRA contributions as an either/or decision

Deciding whether to contribute to a Roth or traditional IRA depends on your tax bracket today versus where it will be in retirement.

If you have no idea and your income allows you to make a deductible IRA contribution, it's reasonable to split the difference and invest half in each.

Making a nondeductible IRA contribution for the long haul

If you earn too much to contribute to a Roth IRA, you also earn too much to make a traditional IRA contribution that's tax-deductible.

The only option open to taxpayers at all income levels is a traditional nondeductible IRA, but this subjects investors to two big drawbacks: required minimum distributions (RMDs) and ordinary income tax on withdrawals.

Assuming a backdoor Roth IRA will be tax-free

The backdoor Roth IRA should be a tax-free or nearly tax-free maneuver in many instances.

But for investors with substantial traditional IRA assets that have never been taxed, the maneuver may be partially taxable, thanks to " the pro rata rule."

Assuming a backdoor Roth IRA is off-limits

Investors with substantial traditional IRA assets that have never been taxed shouldn't automatically rule out the backdoor IRA idea, however.

If they have the opportunity to roll their IRA into their employer's 401(k), they can effectively remove those 401(k) assets from the calculation used to determine whether their backdoor IRA is taxable.

Not contributing to an IRA later in life

Making Roth IRA contributions later in life can be attractive for investors who plan to pass the money on to their heirs, who in turn will be able to take tax-free withdrawals. After all, Roth IRAs don't impose RMDs. Traditional IRA contributions will tend to be less attractive for older adults because they do.

Delaying IRA contributions because of short-term considerations

Investors might put off making IRA contributions, assuming they'll be tying their money up until retirement. Not necessarily.

Roth IRA contributions can be withdrawn at any time and for any reason without taxes or penalty, and investors may withdraw the investment-earnings component of their IRA money without taxes and/or penalty under specific circumstances.

Running afoul of the Roth IRA five-year rule

All investors must satisfy the " five-year rule," meaning that the assets must be in the Roth for five years before they begin withdrawing them. And things get more complicated if your money is in a Roth because you converted traditional IRA assets.

So, get some tax advice if you need to pull money out of a Roth IRA shortly after depositing it.

Doubling up on tax shelters in an IRA

It also makes sense to avoid any investment type that offers tax-sheltering features itself. That's because you're usually paying some toll for those tax-saving features, which you don't need because the money is inside of an IRA.

____

This article was provided to The Associated Press by Morningstar. For more personal finance content, go to https://www.morningstar.com/personal-finance

Continue Reading...

Popular

IRS whistleblower on Hunter Biden is out as acting commissioner just days after getting the job

WASHINGTON (AP) — Just days after to acting IRS commissioner, the whistleblower who testified publicly about investigations into Hunter Biden’s taxes is out of the job, according to three people familiar with the decision.

Top "60 Minutes" producer quits, saying he can no longer run the show as he has

NEW YORK (AP) — The top producer at “60 Minutes” said Tuesday that he is quitting the show, saying that it has become clear that he would no longer be able to run it as he has in the past.

Nvidia Is About to Shock the World: July 23rd - Ad

Jeff Brown, the tech legend who picked shares of Nvidia in 2016 before they jumped by more than 22,000%, is warning everyone to... Mark this date on your calendar: July 23rd! That's when Nvidia could help send shares of this Elon Musk supplier skyrocketing higher.

Despite a court order, White House bars AP from Oval Office event

Despite a court order, a reporter and photographer from The Associated Press were barred from an Oval Office news conference on Monday with President Donald Trump and his counterpart from El Salvador, Nayib Bukele.

The Most Important "AI Stock" You've Never Heard Of - Ad

The AI revolution is moving faster than anyone expected. But what no one is talking about is the one company AI simply can't exist without. It may be the single most important AI investment, yet most people don't even know its name. For now. The moment Wall Street catches on, this $20 stock could explode.

One Coin to Rule Them All... - Ad

Hardly any investors are talking about this coin but I believe that's about to change with some potentially huge news! Get in on the ground floor while it's rock bottom with this new how-to guide, just $3.

Surveillance video shows New York-to-Paris flight stowaway slipping past gate agents

NEW YORK (AP) — The woman who was able to sneak onto a New York-to-Paris flight without a boarding pass late last year was able to get on the plane by glomming onto a group of ticketed passengers as they passed gate agents, new surveillance video shows.

Man Arrested For Arson At Pennsylvania Governor's Residence, Josh Shapiro Says, 'This Kind Of Violence Has Become Far Too Common'

A man was arrested for a targeted arson attack on Pennsylvania Governor Josh Shapiro's residence while he and his family were inside, prompting attempted murder and terrorism charges.

New Study: 50 Stocks Will Crash While 7 MAGA Stocks Will Soar - Ad

If you own any of these stocks -- directly or through mutual funds -- I want to encourage you to sell them before April 30th. I've compiled all 50 companies in my "MAGA Blacklist" report. Your retirement could depend on seeing this list.

Meet the Key Five People Who Are Shaping Trump's Economic Agenda

In the midst of a broad tariff agenda that has caused turmoil in financial markets, President Trump is relying on a diverse group of economic advisers to guide his policies.

Trump reaches deals with 5 law firms, allowing them to avoid prospect of punishing executive orders

WASHINGTON (AP) — announced deals Friday with five law firms that will allow them to avoid the prospect of a punishing executive order and require them to together provide hundreds of millions of dollars' worth of free legal services for causes his administration supports.

Musk's Chainsaw Could Fuel These 7 Stocks Higher (Buy Before April 30th) - Ad

Elon Musk slashed Twitter's staff by 80%--now Trump's putting him in charge of cutting government bloat! The impact? MASSIVE. My insider network has pinpointed 7 stocks set to soar--but you must act before April 30th. Don't miss this historic shift!

Rocket Lab Stock Is Shooting Higher Thursday: What's Fueling The Launch?

Rocket Lab USA Inc (NASDAQ:RKLB) shares are trading higher Thursday after the company announced it was selected by Kratos Defense & Security Solutions Inc (NASDAQ:KTOS) to provide a hypersonic test flight for the U.S. Department of Defense (DOD).

A "Backdoor" Way to Claim a Stake in Elon's Optimus Before Its Launch - Ad

In 2017, Elon Musk went on record to say his Optimus could be "capable of doing anything". One Silicon Valley insider has identified a little-known "backdoor" way to invest in Optimus before its launch. This under-the-radar play could deliver astronomical returns - and you can get started with as little as $100.

60,000 Americans to lose their rental assistance and risk eviction unless Congress acts

Moments after Daniris Espinal walked into her new apartment in Brooklyn, she prayed. In ensuing nights, she would awaken and touch the walls for reassurance — finding in them a relief that turned to tears over her morning coffee.

What's Going On With VeriSign Shares Friday?

VeriSign reported better-than-expected first-quarter earnings on Thursday after the market closed.

Maverick Trader Reveals 97% Accurate System - Ad

This man's simple strategy makes money in any market...With a 97% accuracy at hitting winners over the past 8 years!

Beyoncé Partnership, Strong Sales And Low China Exposure - Analyst Upgrades Levi Strauss To Buy

Levi Strauss & Co. (NYSE:LEVI) gets a bullish nod from BofA, highlighting its global brand strength, solid first-quarter results, and robust wholesale recovery. With low leverage and limited China risk, LEVI's diversified growth strategy fuel optimism.

Donald Trump's Trade War: JPMorgan Predicts Deals, Higher Taxes and Potential Recession Avoidance

JPMorgan (NYSE: JPM) has predicted that the ongoing tariff war initiated by President Donald Trump could lead to some agreements between the US and its trade partners, along with a significant rise in tax rates.

No.1 Opportunity for 2025 [Take Action Now!] - Ad

Starlink's potential IPO Could Be the Biggest in History--Silicon Valley insider James Altucher has uncovered a way to profit BEFORE the IPO--with as little as $50. Musk's $180B giant is set to launch--will you miss out? Claim your spot before it's too late.

Gentex Q1 Impacted By Tariff Uncertainty, Suspends Mirror Production For Chinese Market

Gentex shares fall as Q1 results reflect tariff pressures, prompting a halt in China-bound mirror production and a lowered 2025 sales outlook.

Market turmoil has many afraid to check retirement savings

NEW YORK (AP) — Michael Montgomery used to check the balance on his retirement account once a week and smile. But lately, not wanting to get upset and question if he could retire in a few years, there was only one solution.

Brace Yourself for Jeff Bezos' "Amazon Helios" - Ad

Amazon delivers 20 million packages a day... powers some of the most popular websites... delivers medication to half of the U.S. population... and even produces award-winning films and TV shows. But a Wall Street legend -- twice featured on 60 Minutes -- predicts that "Amazon Helios" will be bigger than all of those... COMBINED.

China's Chip Breakthrough Without ASML Makes Chamath Palihapitiya Take Stock Of Beijing's 'Formidable' Nature: 'America Can Win If…'

Former Intel executive William Huo highlights China's breakthrough in producing 5nm chips without EUV technology, sparking concerns from Chamath Palihapitiya that the U.S. risks losing its technological edge to China without urgent innovation.

Social Security Fears Drive Americans To Claim Benefits Early, Despite Smaller Checks, As Trump's Policies Fuel 'Fearmongering'

Social Security claims rose due to fearmongering, budget cuts and administrative turmoil. Early claims lead to lower payments. Trump's immigration policies could worsen funding gap.

Defi Coin Triggers All "Buy" Signals and Could Break Out Soon - Ad

Some are calling this the most promising DeFi project since Ethereum itself. Here's the #1 DeFi Coin Set to Soar. While Bitcoin grabs headlines, this lesser known DeFi coin is quietly gearing up for a monster rally. Experts say now is the time to buy before it reaches escape velocity.

Maryland Senator Grabs National Spotlight With El Salvador Meeting With Deportee

Sen. Chris Van Hollen (D-Md.), a longtime but mostly low-profile legislator, has surged into the national spotlight following a trip to El Salvador to meet with Kilmar Abrego Garcia.

Elon's Greatest Invention... Hidden in South Memphis? - Ad

Tech legend Jeff Brown recently traveled to the industrial zone of South Memphis to investigate what he believes will be Elon's greatest invention ever... Yes, even bigger than Tesla or SpaceX.

Intel Stock Rallies On Layoff Buzz As Wall Street Braces For Threadbare Q1 Earnings

Intel reports Q1 earnings, mixed signals on stock chart, cautious outlook in short-term, potential upside with cost-cutting measuresIntel will report Q1 earnings with expected EPS of $0.01 and revenue of $12.30 billion. Stock down 39% in past year, but up 4% YTD.

Most Americans Say Their Finances Are Getting Worse, Survey Finds

More than half of respondents now expect the stock market to decline, a reversal from earlier this year when optimism was stronger.

Elon Musk Drops Stunning Bombshell? - Ad

Behind closed doors, Musk revealed a game-changing breakthrough technology that could shake the tech world & crush major companies. Why is no one talking about it? Luckily, we had a man on the inside - watch now to see the details & how to profit!

Ex-Abercrombie CEO has dementia and is unfit for sex trafficking trial, prosecutors and defense say

NEW YORK (AP) — The former CEO of Abercrombie & Fitch is suffering from dementia and isn't competent to , according to prosecutors and his lawyers.

Anthony Scaramucci Says 26 Years Ago Warren Buffett's Amazon Caution Cost Him Millions: Former Trump Official Sees Today's AI Hype As History Repeating

Anthony Scaramucci shared how Warren Buffett's caution in 1999 led him to miss out on millions in Amazon stock, and how he believes the current skepticism surrounding AI mirrors that same missed opportunity.

World Economic Forum: "Arguably the Most Exciting Human Discovery Since Fire" - Ad

Sam Altman, Bill Gates, and Mark Zuckerberg are all investing vast sums of money into a radical technology. According to Bloomberg, this could become 10 times bigger than AI, quantum computing, electric vehicles, cryptocurrencies, and robotics combined. And one stock is at the center of it all.

Japan reports a $63 billion trade surplus with the US as it talks with Trump on tariffs

TOKYO (AP) — Japan recorded a trade deficit in its March-April fiscal year but racked up a surplus with the U.S., the Finance Ministry reported Thursday.

Trending Now

Information, charts or examples are for illustration and educational purposes only and not for individualized investment management This message contains commercial elements, such as advertising. We only send these offers to those who have opted in to our newsletter. Past performance is not indicative of future results. For these reasons we strongly suggest trading in a DEMO/Simulated account. The information provided by us is for educational and informational purposes only. We make no representations or warranties concerning the products, practices or procedures of any company or entity mentioned or recommended and have not determined if the statements and opinions of the advertiser are accurate, correct or truthful. If you use, act upon or make decisions in reliance on information contained or any external source linked within it, you do so at your own peril and agree to hold us, our officers, directors, shareholders, affiliates and agents without fault.

Copyright smartmoneytrading.net
Privacy Policy | Terms of Service