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IRA Financial Group Blog

Free Money for Your IRA – Episode 278

Adam Talks
3 Minute Read

IRA Financial’s Adam Bergman Esq. discusses why you should consider contributing stimulus funds from the government into an IRA, if you can afford to do so.

On this episode of Adam Talks, Mr. Bergman is focusing on the latest stimulus package, which was signed by the president soon after this podcast first aired. The $1.9 trillion package is a continued effort to help Americans who have been most affected by the COVID-19 pandemic. Not only does it include stimulus check for millions of Americans, but also expands on the popular Payroll Protection Program, continued unemployment benefits and aid for getting the vaccines to everyone. Adam’s focus will be on those checks being sent to us, and how it may be free money for your IRA.

Who is Getting a Check?

If you are single and earned less than $75,000 or married and earned less that $150,000, you will receive a check for $1,400 each. If you earn up to $80,000 (or $160,000), you will receive lesser funds. However, if you are above that threshold, you will not be getting a stimulus check. Further, it expands on the definition of dependents to include adults. This means that college students, elderly Americans and disabled people may now be included as a dependent, in which you will receive a check for them.

As Adam talks about, we are not here to give the pros and cons of this new package. Whether it’s too much or too little, what it means for the future, etc. is neither here nor there. These checks are arriving to qualified Americans.

For example, a family of four earning less than $150,000, will receive a payment of $5,600. Hopefully, that helps those most in need. What statistics are showing, is that Americans are saving more and spending less (for obvious reasons). If you are one of the lucky ones and do not need this additional money to pay for food or rent, you can help out your family in other ways.

Free Money for Your IRA!

According to reports, the average checking account balance is up 40%. Further, those in the lowest quarter of income are up 45%. We have been blessed here at IRA Financial. We are able to work remotely, and because alternative assets have become more popular, we are thriving. There are millions of people out there who have more money saved now than they did pre-COVID.

But why? Simply put, people are not spending. Nobody’s been traveling, going to Broadway shows, concerts and sporting events. Plus, with many people working from home, there are less expenses, such as commuting and dining out. Thankfully, as time passes, more things are opening up. Maybe a return to normalcy will be upon us soon. But until then, you have free money for your IRA.

If you don’t need those stimulus funds for day to day living and you have an emergency fund, why not invest it? Many Americans have started trading stocks again, with popular companies like Robinhood seeing a record number of new investors. Unfortunately, most of these sites will not allow you to use retirement funds. However, you can self-direct your IRA and use your funds to invest the way you want.

Go Roth!

If you are wary about putting funds into an IRA, in which you cannot touch penalty-free until you reach age 59 1/2, you should consider a Roth IRA. You can contribute up to $6,000 to a Roth, plus an additional $1,000 if you are age 50 or older. It’s funded with after-tax money. Therefore, you will see tax-free growth of your money.

Of course, like a traditional, pretax IRA, you are not allowed to withdraw funds from the plan until you reach the age of 59 1/2 and any Roth IRA has been opened at least five years. However, contributions can be withdrawn at any time and for any reason.

For example, if you contribute $2,000 to a Roth and it grows to $5,000 in a year or two. You can withdraw that $2,000 whenever you want. The $3,000 in earnings must remain in the plan until you reach the above-mentioned milestones. It’s like getting the best of both worlds. Your stimulus money will grow in a tax-advantaged account, but you can take it out whenever you want. Meanwhile, those earnings will remain in the plan and continue to work for you.

Again, if you self-direct the Roth, you can invest in almost anything you wish – real estate, gold, cryptos, a business. The list is virtually endless.

Conclusion

As Mr. Bergman mentions, take care of your family first. If you need the money now, spend it on the most important things. What you probably shouldn’t do is go out and buy a new iPhone or start up a lease on a Tesla. Take this free money for your IRA and invest. If you get stuck for cash, you can always withdraw the money you contribute. Let your IRA work for you.

Thanks for listening and at least do your research and see the best things you can do with those funds. Be sure to check out our SoundCloud page for all our podcasts!

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