FAQ

What is the difference between a Roth IRA and a Traditional IRA?
A Traditional IRA and a Roth IRA are both retirement savings accounts that offer tax advantages, but the timing of those tax benefits is what sets them apart. With a Traditional IRA, your contributions are often tax-deductible in the year you make them, which lowers your taxable income now. The money grows tax-deferred, meaning you don’t pay taxes on gains or income within the account until you withdraw the funds in retirement. At that point, withdrawals are taxed as ordinary income. This setup can be appealing if you expect to be in a lower tax bracket when you retire than you are today.

A Roth IRA, on the other hand, is funded with after-tax dollars—you don’t get a tax deduction for contributions. However, the trade-off is powerful: your money grows tax-free, and qualified withdrawals in retirement are also tax-free. This means you pay taxes on the money going in, but nothing on the way out, as long as you follow the rules (such as being at least 59½ and having the account open for at least five years). A Roth can be especially advantageous if you expect to be in the same or a higher tax bracket in the future, or if you value the certainty of tax-free income in retirement.

There are also differences in rules and flexibility. Traditional IRAs require you to start taking required minimum distributions (RMDs) at age 73, whether you need the money or not. Roth IRAs have no RMDs during your lifetime, allowing the funds to grow untouched for as long as you like. Income limits also play a role—high earners may be restricted from contributing directly to a Roth IRA, though they might still use a “backdoor” conversion strategy. Ultimately, the choice between the two often comes down to your current versus future tax situation, your retirement goals, and the flexibility you want with your money.

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What happens to my money if something happens to me? Do I need a will or a trust? 
When you pass away, what happens to your money depends largely on how your accounts and assets are set up. If you have named beneficiaries on accounts such as life insurance policies, retirement plans, or payable-on-death bank accounts, those funds typically bypass probate and go directly to the named individuals. Assets held jointly with rights of survivorship, such as a joint bank account or jointly owned real estate, usually transfer automatically to the surviving owner. Without these designations in place, your assets will generally become part of your estate and be distributed according to your will—or, if you have no will, according to your state’s intestacy laws.

If your estate goes through probate, the court oversees the process of paying off any debts and taxes before distributing the remaining assets to your heirs. This process can take several months or longer, depending on the complexity of your estate and whether any disputes arise. Having a clear and updated estate plan—including a will, trusts, and beneficiary designations—can help streamline the process, reduce legal costs, and ensure your wishes are honored. Trusts, in particular, can allow for faster and more private distribution of assets, avoiding the public nature of probate.

It’s also worth noting that your estate may be subject to taxes, though most people fall below the federal estate tax threshold. However, state inheritance or estate taxes could still apply depending on where you live. Certain assets, such as retirement accounts, may also trigger income taxes when beneficiaries withdraw the funds. By planning ahead with strategies like gifting, charitable donations, and tax-efficient account designations, you can help preserve more of your wealth for your loved ones. Clear communication with your heirs about your plans can also minimize confusion and conflict during an already difficult time.

How do I prepare for my child's education? 
Saving for a child’s education starts with setting a clear goal and beginning as early as possible. The earlier you start, the more you can take advantage of compound growth—where your money earns interest, and then that interest earns interest over time. Begin by estimating the future cost of tuition, room and board, and other expenses, then break it down into a monthly or annual savings target. Even small, consistent contributions can grow into a meaningful amount by the time your child is ready for college. Automating your savings ensures you stay on track without having to think about it every month.

One of the most effective tools for education savings in the U.S. is the 529 college savings plan. These plans allow your money to grow tax-deferred, and withdrawals are tax-free when used for qualified education expenses at an accredited educational institution. Note that this can include trade schools. Many states also offer tax deductions or credits for contributions. You can choose investments that match your risk tolerance and timeline—more aggressive when your child is young, gradually shifting to more conservative options as college approaches. Other options include Coverdell Education Savings Accounts, custodial accounts, or even a dedicated brokerage account, though each has different tax and control implications.

It’s also important to balance education savings with your own financial stability. While helping your child avoid student loans is admirable, you should avoid compromising your retirement security in the process. Consider involving your child in the process as they get older—sharing progress, discussing scholarship opportunities, and encouraging them to contribute from part-time jobs. This not only builds the fund faster but also teaches valuable lessons about saving, goal setting, and financial responsibility. By combining early action, the right savings vehicle, and a consistent plan, you can make a significant dent in future education costs.

Roth IRA distributions are tax-free if made 5 years after the initial contribution to the plan and you are over 59 1/2. Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses, summary prospectuses and 529 Product Program Description, which can be obtained from a financial professional and should be read carefully before investing. Depending on your state of residence, there may be an in-state plan that offers tax and other benefits which may include financial aid, scholarship funds, and protection from creditors.. Before investing in any state's 529 plan, investors should consult a tax advisor. If withdrawals from 529 plans are used for purposes other than qualified education, the earnings will be subject to a 10% federal tax penalty in addition to federal and, if applicable, state income tax. 

When do I need to start Required Minimum Distributions from my retirement accounts?

If you’re turning 73 this year, you’ll need to begin taking Required Minimum Distributions (RMDs) from your tax-deferred retirement accounts, such as traditional IRAs, 401(k)s, 403(b)s, and other similar plans. The IRS requires these withdrawals to ensure that retirement funds are eventually taxed, since contributions and growth were originally tax-deferred. Your first RMD must be taken by April 1 of the year following the year you turn 73. For example, if you turn 73 in 2025, you could delay your first withdrawal until April 1, 2026. However, if you wait, you’ll also need to take your second RMD in the same year—by December 31, 2026—potentially doubling your taxable income for that year.

The amount of each RMD is based on your account balance as of December 31 of the previous year and your life expectancy factor, as published by the IRS. Your custodian or financial advisor can calculate the exact figure for you. Missing an RMD or withdrawing less than required can lead to steep IRS penalties, though recent law changes have reduced the penalty to 25% of the shortfall (and potentially down to 10% if corrected in a timely manner). While RMDs can increase your taxable income, there are planning strategies—such as Qualified Charitable Distributions (QCDs) from IRAs—that allow you to satisfy the requirement without raising your tax bill. Careful planning around timing and tax strategies can make a big difference in how much you keep.