Funding a Roth IRA With Disposable Income


You have funded your 401(k) enough to receive a full company match (either traditional or Roth.)  You are paying all of your bills when they are due each month.  You have enough cash set aside for emergencies.  There is some cash left over.  Now you want to continue to save for retirement.  Continuing to fund your traditional or Roth 401(k) is a good idea. Even better is to fully fund a Roth IRA before moving back to your 401(k).  With a Roth IRA, you are able to take out your contributions at any time-one day…one year…ten years.  Any dollar you take out first comes out of your contributions so there is no chance that a portion of earnings will become taxable with possible penalties.  This is not the case for either a traditional or Roth 401(k).

If you are over the income levels to contribute directly to a Roth, no worries.  Contribute to a traditional IRA and then convert this to a Roth IRA the next day.  Since the first contribution was nondeductible on your tax return, the conversion is tax free.  Subsequently, any withdrawals at any time first come out of this converted amount, which will be tax free since you had basis in the full amount of the original conversion.

The only downside of doing this versus opening a taxable, non-retirement investment account, is that any growth is unable to be taken out without penalty.  This is the same downside to any retirement account.  The growth must be used for “retirement” (after you are 59 1/2 years old with a few other exceptions) to avoid penalty.

There are other nuances to Roth IRAs, such as what happens if you have a traditional IRA that has grown in value and you convert that to a Roth? Are those dollars able to be taken out of your Roth after the conversion without penalty? If you have these or any other questions, please do not hesitate to give us a call at 314-993-4285.

Tips For Stacking Your Retirement Plans

twojobsIf you receive side income from a second job, now is the time to start adding to your retirement nest egg! Of course, this can get a bit tricky: based on the type of side work you perform, you need to evaluate which plan you need to open (if any) and how much money you can put into it.

The team at Hauk Kruse & Associates is here to give you a few pointers.

Types of retirement plans:

If both of your jobs are through employers that sponsor 401(k)s, you probably don’t need to open another retirement account, but it is important to check that you’re coordinating your contributions to the two plans.

If you receive side income from a consulting job or self-employment, you can either fund a solo 401(k) or a SEP-IRA. *It is important to know that just because a solo 401(k) is the best option for one year, it does not necessarily mean it is the best option for the next year.

How to determine how much money you can put into each of your plans:

For your 401(k) offered by your day-job or for a solo 401(k), you can put away $18,000 (or $24,000 if you are 50+ years old) in 2015, with a maximum of $53,000 for 2015.

The SEP-IRA is typically the best option for someone who has already maxed out a 401(k). For a SEP-IRA, you can put up to 20% of your net earnings, after subtracting the 1/2 of your Social Security and Medicare taxes that are deductible, with a maximum of $53,000 in 2015.

This marks the last Retirement Tuesday post! Please feel free to  please contact our office at 314-993-4285 and talk to one of our CPAs if you have any questions on retirement!


5 Ways to Make Your 401(k) Work For You

401kA 401(k) is an employer-sponsored retirement savings plan which allows you to save a portion of your paycheck before taxes are taken out.

You most likely already have a 401(k)… one that you set up a while ago, automatically put the same percent of your salary to every pay period, and rarely think about. Hopefully, the fact that you are reading this means that you wish your 401(k) could be better for you.

Hauk Kruse & Associates is here to tell you that it can!

Here are 5 ways to make your 401(k) work for you:

  1. Ignore the “recommended salary percentage” you’ve seen during all your research. Instead, contribute what works for you.Most people will recommend that you put 10% of your salary in your 401(k), but in reality you should contribute as much as you can. The annual contribution limit is $17,500 for 2014 and $18,000 for 2015. Your goal should be getting as close to those caps as possible while still being able to pay all your living expenses.**hint: If you get a raise, raise your contribution amount. Unless you have a major life event, your living expenses will be the same as before your raise. Therefore, you can put all that extra money straight into your 401(k). Most plans even have an “auto-pilot” setup that will boost your contributions for you.
  2. Take risks that match you.When it comes to putting your money in stocks and bonds, you need to make sure that you have a mix which reflects:
    Your industry: Think: If the market goes south, how at risk is your career? If it’s low, you may be able to take more risks with stocks. If it’s high, you need to take less risk and go with more bonds.
    Your age: Keep this rule of thumb in mind: The closer you are to retirement, the less stocks you should have.
    Your risk tolerance: If you aren’t a huge risk taker, you shouldn’t stress yourself out with too many individual stocks (consider mutual funds!)…. but you need to be careful about taking no risk at all. The opposite goes for the big risk takers…. it goes without saying that taking too much risk can lead to bad turnouts.** hint: Never have all stocks or all bonds! A properly weighted portfolio leverages stocks and mutual funds to spread risk equal to your age and risk tolerance.
  3. Don’t touch your money until you actually retire. Any money you withdraw from your 401(k) before you turn 59 1/2 is subject to a 10% penalty plus income tax. (See Tip #5 below for the one exception to this rule).** hint: Contribute what works for you. If you feel that you are contributing too much causing you to have to withdraw from your 401(k), you can lower your payments… and even stop them all together if you must. Each company has their own rules on how often you can change your contribution amounts (it can be monthly, quarterly, semi-annually, or annually). Contact your HR department to find out your company’s rules.
  4. Always, ALWAYS take the match.No matter what percent your employer is offering you… take the match! Whether it is 3% or 15%, it is still FREE MONEY.
  5. Lastly…. If you leave your employer before retirement age, rollover your 401(k).If you leave your employer before the age of 59.5, you can transfer (or rollover) your 401(k) plan to an IRA without being tax or penalized. You can even rollover multiple 401(k)s to a single IRA… so if you have left other employers before, you can rollover those 401(k)s too.There is only one exception to this rule: if you retire between 55 and 59.5, you should not rollover your 401(k). There is a special provision in 401(k) plans that allow those who retire between the ages of 55 and 59.5 to withdraw from their 401(k) without the penalty tax. You will be immediately disqualified if you rollover your 401(k) to an IRA.

As always, the team at Hauk Kruse & Associates hopes that this information has given you something to think about. If you have any questions regarding your 401(k) and how you can make it work for YOU, feel free to call our office at (314) 993-4285 or e-mail us at

4 Tips on Getting Free Money for Retirement

It goes without saying that retirement advice is always appreciated and is highly sought after. That’s why we are featuring Retirement Tuesday every Tuesday in June!

While retirement advice is often complicated and must be personalized, we have four tips on picking up free money for retirement that everyone can follow.


  1. Max out your 401(k).
    Your 401(k) is an excellent tool for getting your retirement money. In order to do this, you should focus on maximizing your contributions and making sure you always get the company match.
    ** To learn how to make your 401(k) work for you, tune in to our blog next week where we will go into 401(k)s in depth.
  2. Open a spousal IRA.
    If your spouse does not have access to a 401(k) (for example, if your spouse is a homemaker), you can open up a spousal IRA. With this type of IRA, you can set aside money each year into your spouses account for you to access after retirement. As a bonus, it will cut your joint taxes down in the meantime.
  3. Max out your Roth IRA.
    Contributions to Roth IRAs can be taken back out immediately if needed with no tax consequences. It is like having a tax free savings account. Therefore, it is smart to max out your contributions every year. If you make over the threshold for contributing to a Roth IRA, call us and we can go over your options. Often, the benefits outweigh the initial cost.
  4. Consider a health savings account (HSA).
    With HSAs, you are essentially taking the money you would be spending on health care and putting it into a separate account… only the money is now pre-tax. As an added bonus, any money not used will roll over every year with interest. For those with high-income, it’s like having a second IRA!

If you have any questions on picking up free money for your retirement, feel free to call us at (314) 993-4285 or email us at

View your Social Security benefits in real-time online!

mySSAThe Social Security Administration now offers a “My Social Security” online account! This feature is there to help you prepare for and manage your retirement.

With “My Social Security”, you can:

  • Get your online Social Security statement
  • Verify changes in your employment history have been recorded correctly: whether you have changed jobs once or dozens of times, it is important that these changes have been properly accounted for.
  • Verify your lifetime earnings: they provide you with a full record of your earnings!
  • See estimates of your future benefits: if you aren’t retired yet, you can view how much you could get when you do!
  • Manage your benefits
  • …and more!

Opening a “My Social Security” account is quick, safe, free, and easy! Just click here to get started.

If you have any questions about your Social Security or your retirement, please call our office at 314-993-4285.