How do I make a contribution to my Rocket Dollar IRA?
As you have a Traditional IRA, please review the deductibility limits https://www.irs.gov/
We'll prefill an IRA Contribution Form for you and send it with detailed funding guidance.
We need to gather some information first:
1. Please tell us the year(s) and amount that you'd like to contribute for.
Example: 2021, $3,000
2. Funding info. (Bank and Account name - where you'll be sending funds from - no acct numbers necessary)
Example: Bank of America, Mary Smith
3. Preferred funding method (Fed Fund Wire - likely outbound fee by your bank OR Mail Check - no fee)
Example: Will mail check
IRA Custodian needs to know this information to correctly characterize funds received to your IRA. Know that Silver clients can sometimes have more restrictions on their contribution funding method.
What is the difference between how Traditional IRAs and Roth IRAs are taxed?
When you make a contribution to a traditional IRA, you are reducing your current year's taxable income. If you made $100,000 in a year, qualified for a deduction, and contributed $6000 to a traditional IRA , your taxable income would be $94,000.
Traditional IRAs are pre-tax, meaning taxes are taken at ordinary income rates in retirement.
When you make a contribution to a Roth IRA, you are not reducing your current year's taxable income. If you made $100,000 in a year, you would have no opportunity for a deduction after contributing to a Roth, but the Roth IRA investments can come out tax-free if you wait at least five years or until retirement.
Can I make either contribution?
You can only do a Traditional IRA contribution if you have a Traditional IRA, or a Roth IRA contribution if you have a Roth IRA at Rocket Dollar. Feel free to contact our sales team if you are not sure what is right for you. Rocket Dollar cannot provide tax advice, but we can go over some basic common best practices for Traditional and Roth IRAs.
Does Rocket Dollar help me with my taxes and contributions?
Rocket Dollar is not a CPA and cannot assist you in calculating the eligibility or the taxable impact of a Traditional or Roth IRA. If you ask a Rocket Dollar team member for tax advice, we will instruct you to go to your own CPA or will refer you to one with a speciality in Self-Directed IRAs.
Almost any CPA can assist with basic contributions to an IRA, which has the same contribution rules when it is a Self-Directed IRA that can invest in alternatives.