IRAs

Dear Garden State Trust:

Which is better, the traditional IRA or the Roth IRA?

—Future Retiree

Dear Future:

There is no simple answer to your question, unfortunately.  The traditional IRA offers an immediate income adjustment and savings in federal and state income taxes.  Taxpayers who are short on cash may need the deduction to be able to make a full $5,500 IRA contribution ($6,500 for those 50 and older).  The income adjustment also may affect eligibility for other tax credits.

The downside for the traditional IRA is that all retirement withdrawals are fully taxable as ordinary income, even long-term capital gains.  If one is in a lower tax bracket in retirement, this may not be a concern, but future tax brackets are unpredictable.  What’s more, distributions from a traditional IRA are required once one reaches age 70½. Taxable IRA distributions also may increase the taxes on one’s Social Security benefits and one’s Medicare premiums.

These potential tax traps are avoided with the Roth IRA, as all distributions will be fully tax free after age 59½, provided only that the account has existed for five years.  There are no required minimum distributions.  A Roth IRA may be an especially good choice for a bequest, as tax-free distributions may be spread over the beneficiary’s lifetime. (Estate taxes will be due on the Roth IRA in very large estates.)  The difficulty with the Roth IRA is that the hit to one’s cash flow is more severe without the current deduction.

These tax considerations, although significant, are less important than making a full contribution to one or the other IRA form early in one’s career.  The more time that one is invested in the market, the better the odds of having a financially secure retirement.

Do you have a question concerning wealth management or trusts? Send your inquiry to contact@gstrustco.com

(October 2018)
© 2018 M.A. Co. All rights reserved.

Falling into Foliage

New Jersey may not be part of New England, but its reputation for the beautiful changing leaves could be extended to our trees and changing colors too.

New Jersey’s peak fall colors are usually between October 19th and the 29th, so it’s the perfect time to plan a trip.  Many factors contribute to the exact timing of the leaves changing, from temperature to rainfall and elevation. In the category of “I didn’t realize they tracked that information”, you can now get a better sense of exactly what’s going on by looking at up-to-date reports from:

http://www.foliagenetwork.com

Where to go for the best views depends on your capabilities and time investment. If you’re healthy and ready for hike, you may want to consider going to the highest elevation in New Jersey on the Appalachian Trail. You can see NJ, PA, and NY from the top of the obelisk there.

There are many parks that may be hiked, and a wonderful list of them has been compiled here:

https://www.njhiking.com/best-fall-foliage-hikes-in-new-jersey/

While it may not have made their list for the best foliage hikes, Double Trouble State park is close to where we are in Toms River, and has some easy trails that can be walked too.

Hiking can be strenuous for all ages, so be careful out there! Don’t push yourself too hard or think that you have to hike to experience the foliage.

New Jersey has also has three scenic byways that are particularly good for experiencing the fall foliage, so you can enjoy the views from the comfort of your vehicle:

  • Delaware River Scenic Byway (32.8 miles)
  • Millstone Valley Scenic Byway (27.5 miles)
  • Palisades Scenic Byway (13 miles)

Here’s a link to New Jersey Department of Transportation’s website for more information about the byways:

https://www.state.nj.us/transportation/community/scenic/

Enjoy the fall, while it lasts!