Daily Archive: December 13, 2017


Indonesia court rejects petition to bar consensual sex outside marriage

JAKARTA (Reuters) – Indonesia’s constitutional court on Thursday narrowly rejected a petition by a conservative group to make extramarital sex illegal, but rights activists braced for a renewal of the battle in parliament and other state institutions.


U.N.’s Guterres warns against ‘sleepwalking’ into war over North Korea

TOKYO (Reuters) – U.N. Secretary-General Antonio Guterres, warning against the danger of “sleepwalking” into war, said on Thursday that Security Council resolutions on North Korea’s nuclear and missile programs must be fully implemented by Pyongyang and other countries.


Two Reuters journalists arrested in Myanmar, face official secrets charges

YANGON (Reuters) – Myanmar’s government said on Wednesday that police had arrested two Reuters journalists, Wa Lone and Kyaw Soe Oo. The reporters had been working on stories about a military crackdown on the Rohingya Muslim minority in Rahkine State that has caused almost 650,000 people to flee to neighboring Bangladesh.


Israeli undercover soldiers seen arresting Palestinian protesters

Footage shows officers posing as protesters before pulling out pistols and seizing stone throwers in West Bank

Dramatic footage has emerged of plain clothes Israeli troops – known as “mustarabeen” – infiltrating a Palestinian demonstration in Ramallah and arresting stone throwers.

The soldiers, dressed as Palestinian protesters, were caught on camera by AFP journalists during a demonstration near the “DCO” checkpoint to the north of Ramallah, which is a frequent location for stone-throwing protests.

Continue reading…


7 Things You MUST Know About the Roth IRA Rules for 2018

Understanding all the Roth IRA rules may seem difficult, but if you plan on adding to your Roth IRA as a part of your portfolio in order to secure a stable and enjoyable retirement, it makes sense to have all of the current information regarding the current IRS regulations concerning the Roth.

5 Answers to Roth IRA Rules for 2018:

Need to open a Roth IRA?
Roth IRA Rules You Should Be Aware Of
Does it Apply to 403b’s?
Best Roth IRA Account Options
Disadvantages of Having a Roth IRA
Reasons to Get a Roth IRA

Plus, you want to have a grasp of the current IRA rules for any given year. And with 2018 well under way, many people are already planning their retirement contributions and looking forward to what 2018 might bring.

If you made the maximum contribution amount into your Roth for 2018 and are thinking about saving for next year’s contribution, you may also want to know what the new limits are – as well as the new income caps.

Or maybe you’ve just got your eye on the tax season. No matter what, you should be well aware of all of the latest details before you start making decisions about your IRA. Fortunately, we have all the answers in a single article – and you just happen to be reading it.

A look at the Roth IRA rules for 2018

As to be expected, there are some differences in the Roth IRA rules for 2018 that help this type of account stand out from previous years.

As of late last year, the IRS has revealed it current Roth IRA rules for 2018. This data was based on a variety of factors and figures and includes inflation statistics that they used to come up with new limits for the contributions.

Need to open a Roth IRA?

My favorite online broker is Ally Invest but you can check out our recap on the best places to open a Roth IRA and the best online stock broker sign up bonuses.

There are many good options out there, but I have had the best overall experience with Ally Invest. No matter which option you choose the most important thing with any investing is to get started! Check out my post on the best short term investments as well for more info!

2018 Roth IRA Rules You Should Be Aware Of

1. Contribution Limits Stayed the Same

Standard Roth IRA contribution limits stayed the same as last year, with $5,500 being the limit any individual can contribute. In addition, plan participants ages 50 and over still have a limit of $6,500, which is commonly referred to as the “catch up contribution.”  You can also contribute to your ira up until tax day of the following year.

Contribution Year49 and Under50 and Over (Catch Up)











2. Roth IRA Phase-out Limits Have Increased

Although contribution limits stayed the same, other information released in the 2018 Roth IRA rules show some changes.

For example, the AGI phase-out range for tax payers making contributions to their Roth’s is now between $189,000 and $199,000 for couples who file jointly. A similar increase took place for singles who file taxes and contribute to a Roth IRA. As of 2018, the range where phase-outs begin now starts at $120,000 and ends at $135,000. Meanwhile, married individuals who file separately and have been actively participating in an employer-sponsored retirement plan should see no changes in the phase-out range.

3. Direct 401k Rollovers Into Roth IRA’s is S-I-M-P-L-E

Another rule that remained the same but still offers more opportunity than was available prior to 2010 concerns direct rollovers for 401(k) to a Roth IRA.

The process used to require you to open a traditional IRA account, then rollover your 401(k) into it, and end by opening a Roth account and converting the traditional IRA into a Roth.

In 2010, this changed by skipping a step, letting you convert it directly from the 401(k) to a Roth IRA. It’s less of pain and there is certainly less unnecessary paperwork.

Learn about all the rules of rolling over your 401k into a Roth IRA.

4. Roth IRA Conversions Continue

In 2018, the rules are the same as 2010. However, there is no longer a two year deferral option to report the income. Whatever is converted in 2018 must be reported in 2018, along with any amounts that must be reported as half of a 2010 conversion. The income limits disappeared permanently after 2009.

Want more information on the Roth IRA Conversion? You can see more on the conversion tax rules regarding after tax contributions.

5. “Take Back” Still in Effect (IRA Recharacterization)

If you initiate a Roth IRA conversion and then decide it wasn’t the best idea, you’re in luck. You’re allowed a “take back” in the form of a recharacterization. The recharacterization deadline is 10/15 of the following year. If you did the Roth IRA conversion in 2018, you would have until 10/15/2019.

6. *NEWER RULE* Roth Conversions from Your Existing 401k

This new option was released a few years ago in the Small Business Tax bill. If you are still working, are at 59.5 in age, and your plan allows it, you can do what’s called an in-service distribution with your 401(k) into an IRA. Once you reach the IRA, you then, of course, can do the conversion. What you might not know is that some plans allow you to take out certain “parts” of your 401(k) balance.

The key here is “parts.” You still aren’t able to distribute your entire 401(k) balance to then do a conversion. Where the rules change a bit is regarding the employer profit sharing and employer contributions. These two type of contributions are available for the in-service distribution provided they meet this criteria:

The money has been in there for at least 2 years.
You, the employee, has been in the plan for at least 5 years; or you’ve reached an age that has been satisfied according to your plan documents.

Please note: If you have rolled over an IRA or old 401k into your current 401k or you have contributed after-tax contributions, those will be allowed for an in-service distribution. This is providing the plan document allows it.

7. If You Can’t Convert to Roth IRA…What About Roth 401k?

If don’t qualify for the in-service distribution, you don’t have to throw in the towel quite yet. The IRS just released guidance about the possibility of converting your 401(k) to a Roth 401(k). However, in order to qualify or even entertain this option, you must have a Roth 401(k) option with your current plan.

In other words, no Roth 401(k) option = no conversion.

Another important consideration: Unlike the Roth IRA conversion, there is NOT an option to recharacterize with a conversion to a Roth 401(k).

The key to all this is dependent on your 401(k) plan, and unfortunately, they are all different. The best thing to do is to check with your HR department to see if any of these options are available.

Here’s another piece of advice: If your employer doesn’t offer it, stay on them and continue asking for the retirement perks you really want. A little bit of pressure and persistence never hurts, and they may end up adding the option if they see there is a demand.

Benefits people wanted this option to allow plans to retain assets that otherwise would be distributed out of the plans for Roth IRA conversions. Here is the IRS release on these conversions: https://www.irs.gov/pub/irs-drop/n-10-84.pdf.

Does it Apply to 403b’s?

If you’ll look into the IRS publication, you will see that the in-service Roth IRA conversions can also apply to 403b’s. Once again: Double check with your plan administrator. Notice a theme here?

Best Roth IRA Account Options

There are many brokerage firm options for you to open a Roth IRA with, but which one is best? Each broker is going to have different strengths depending on your investing experience and goals.

The new investor that is just getting started might want to consider opening an account with E*TRADE . Meanwhile, a more experienced trader could really benefit from all the tools offered by Scottrade or TD Ameritrade.

Which broker is right for you? At the end of the day, it all depends on your situation.

We maintain two Roth IRA resources for readers, and both of them are a good read if you’re ready to open a Roth IRA:

a list of the best places to open Roth IRA will walk you through the best account opening options
a list of the best online stock broker sign up bonuses shows you which brokerage firm offers the best bonus for your account size


Scottrade is one of our favorite brokers thanks to their low trading costs, excellent online interface, and 500+ branch locations across the country that you can walk into for help.

Even though Scottrade doesn’t offer a sign up bonus for opening a Roth IRA, we still love this brokerage firm. (And if you are just starting out investing you probably don’t have $10,000 to $25,000 needed to get really big brokerage sign up bonuses.)


For those just starting out and trying to build up a great investing habit, E*Trade is one of the best brokerage firms to go with.

Your trades are rock bottom priced at just $4.95 when you do automatic investing.

That automatic investing will, over time, help you build a large portfolio. You don’t have to have all of the money to invest today as long as you can commit to building up your funds over time.

E*Trade helps you do just that. The interface is simple, and if you can get up to $1000 in free trades for signing up.

Don’t read a bunch of information and put off opening a Roth IRA. Your retirement can’t wait. Get started today and choose one of the above accounts to open your first Roth IRA. Not sure which account you want? Check out the best places to open Roth IRA and the best online stock broker sign up bonuses.

Benefits of a Roth IRA

Obviously, there are certain benefits that come with investing in your Roth with only after-tax dollars. For starters, being able to invest with after-tax dollars offers the distinct advantage of letting your money grow tax-free in this case. When you’re ready to take distributions at retirement age, you won’t have to worry about how the tax landscape has changed, or whether or not you’re at a lower or higher tax bracket than you were before.

Because of this, many financial professionals believe that having a Roth IRA is one of the best ways to diversify your tax liability. By having different types of accounts – including some that tax distributions and a Roth IRA, which does not – you can shield yourself from any unknown changes that could take place within our tax system.

With any type of retirement account, you’ll owe taxes now – or you’ll owe taxes later. Paying taxes on your money now and investing in a Roth IRA means you’ll pay up now, but manage to shield yourself from paying taxes on those funds in the future.

Since many people believe income taxes could be considerably higher in the future, this is often seen as a pretty sweet deal.

Lastly, you can withdraw your contributions to a Roth IRA without penalty at any time, which is why the Roth is also used a long-term savings vehicle for many people. Please note, however, that you can only withdraw contributions without penalty until the age of 59 ½. If you want to withdraw earnings, you’ll pay a 10% federal penalty tax.

The Roth IRA Saver’s Credit

While we know it’s beneficial to save, sometimes the additional money we lose from our wages to save for retirement can be a burden. The US Government implemented the savers credit back in 2002 as a way to encourage Americans to start saving more money for retirement. Since then the program has become permanent, and as of 2006 has remained available for those who qualify to claim on their income tax returns. Unlike tax deductions, tax credits can do more then just reduce the tax you owe, they can increase your refund. It is worth trying to see if you are eligible to claim this credit.

Who Qualifies

Not everyone is eligible to claim the savers credit. However, if you contribute to a retirement account like a Roth IRA and meet the other requirements you may be eligible to claim the savers credit. Students can not claim the credit, nor can someone who is claimed as a dependent on another persons tax return. You must also be 18 years old or older in order to apply for the credit.

Being eligible for the credit is dependent on your adjusted gross income (AIG). Your AGI must be below the set limits in order to apply. Here are the limits for each filing status:

Single $27,750
Head of Household $41,625
Married filing jointly $55,500

What is the Credit

The savers credit is determined based on a percent of your total contribution to a retirement account. The maximum amount one is allowed to contribute to a Roth IRA is $5000 annually. The savers credit is figured on the first $2000 of that money or as much as you have contributed up to $2000. So for example, if you had contributed the full $5000 for the year, then you could claim credit on $2000. If you were eligible for a 50% credit, then you could subtract $1000 off your income on your tax return.

Because the savers credit is based on the person’s adjusted gross income in conjunction with their filing status, the amount of the credit will vary for all filers.


Contributions made to military retirement accounts do not qualify for the credit. Also, you can not claim the credit on rollover distributions, nor can you claim the credit on contributions made to repay a previous distribution.

How to Claim It

In order to claim the savers credit for Roth IRA savings you must complete form 8880. You must file form 1040 or 1040A in order to use form 8880. It can not be use with form 1040ez. This form is filed with your regular tax return and supports your deduction. Even if you did not make any contributions in the previous year, you can still claim the credit up to the April 15th tax deadline.

Disadvantages of Having a Roth IRA

Of course, not everyone likes the setup and structure of Roth IRA accounts. For starters, the low contribution limit of $5,500 for 201 ($6,500 for individuals ages 50 and over) isn’t nearly enough to make or break your retirement. That’s why most financial professionals suggest contributing to a Roth IRA only after (or in conjunction with) maxing out your tax-advantaged retirement accounts.

Second, the income caps that government enacts on Roth IRAs severely limit the number of people who can make the full contribution. Third, some people approach Roth IRAs with feelings of trepidation due to a general distrust of the government. Just because you are promised tax-free distributions twenty, thirty, or even forty years from now, doesn’t mean the economy won’t change so much that the rules are forced to change.

Hopefully that won’t happen and Roth IRA distributions will remain tax-free for the long haul, but many investors fear the worst. After all, thirty years from now is practically a lifetime away.

6 Reasons to Get a Roth IRA

Although Roth IRAs are far from perfect, no retirement savings vehicle offers terms that everyone will love. In the real world, there are plenty of reasons a Roth IRA could be the perfect addition to your long-term savings and retirement strategy. Here are 6 times when a Roth IRA makes perfect sense:

1. You think you’ll be in a higher tax bracket when you retire.

If you think you’ll be in a higher tax bracket when you retire, or have reason to believe taxes will be higher across the board, contributing to a Roth IRA now might be a tax-savvy move. By contributing with after-tax dollars that were charged a lower tax rate now, you can save money by not paying taxes on your distributions later. At least in theory, this is how it is supposed to work.

2. You want to diversify your exposure to taxes.

If you’re contributing to tax-advantaged retirement accounts in addition to a Roth IRA, you’re in the best position to diversify your exposure to taxes – both now, and in the future. All of us will pay now, or we’ll pay later, but by having traditional retirement accounts and a Roth, you’ll experience a little bit of both.

3. You’re already maxing out your work-sponsored retirement accounts.

If you’re maxing out your tax-advantaged retirement accounts and still want to save more for retirement, a Roth IRA might be a smart bet. After all, it just gives you another place to stash away your retirement dollars – and the money you invest could grow considerably over time.

4. You want to invest for retirement, but think you might need to get your money out one day.

Since you can deduct your contributions from a Roth IRA at any time without penalty, a lot of people use them as a form of long-term savings. They may not think they’ll need to access that money, but they want to leave the door open to the option.

A Roth IRA is a smart place to invest your money if you know that you may need it before retirement.

However, it’s important to note that a Roth IRA will inevitably have more risk than other long-term savings vehicles like Certificates of Deposit (CDs) or savings accounts. With a Roth IRA, you can actually lose money.

5. You want flexibility in terms of when you take withdrawals.

Where 401(k) plans and traditional IRAs force you to begin taking withdrawals at age 70 1/2 at risk of paying a large penalty if you don’t comply, the Roth IRA has no such requirement. Therefore, this type of account is a great option for anyone who doesn’t want the hassle of forced distributions when they get old enough.

6. A Roth IRA is a solid estate-planning tool – at least when it comes to taxes.

If you don’t think you’ll need every penny of your retirement funds, a Roth IRA is a great place to stash away your extra dollars. Since distributions are generally tax-free, you can usually leave your account to your heirs, which will allow them to take tax-free distributions.

With your tax-advantaged retirement accounts, on the other hand, your heirs will need to pay income taxes on your retirement funds as they withdraw them.

The Bottom Line

If you think a Roth IRA might be in your future, don’t delay. Get started now by choosing one of the above accounts to get started with. Not sure which account you want? Our posts on the best places to open Roth IRA and the best online stock brokers can help you figure out which broker will work best for your retirement goals, and your personal investing style.


Treas. Reg. § 1.401-1(b) (1)(ii) and Revenue Rulings 71-295 and 68-24


This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

The post 7 Things You MUST Know About the Roth IRA Rules for 2018 appeared first on Good Financial Cents.

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