Considering the many ways that an IRA can be used to help reduce taxable income, tax season is a good time for an IRA checkup — especially since investors have until April 15 to fund contributions for last year. Additionally, with many people holding numerous jobs throughout their career, your clients may have several IRAs held at different institutions. In fact, the Department of Labor estimates that the average worker born in the later years of the baby boom held 11 jobs from age 18 to 44. These types of checkups can help you gather your share of the $2 trillion in assets flowing into IRA rollovers over the next five years.
Consider offering your clients an IRA checkup to determine what they own and whether they are on track to meet their retirement income savings goal. You may also recommend consolidating accounts so they are all held under one IRA. This also presents a good time to review beneficiary designations on your clients’ IRAs and other retirement accounts. Failing to name beneficiaries or having outdated designations can have serious implications. Utilize Putnam’s IRA worksheet to facilitate these reviews with clients.
As you discuss 2011 and 2012 IRA contributions with your clients, here are some important figures to keep in mind:
Lastly, depending on income and filing status, your client may also be eligible for a tax credit of up to $1,000 for contributions to an IRA or employer plan.
Source: IRS, 2011