Meet The Axiom®’s Guest Editor: Keith Butler, JD

I’m Keith Butler, a Wealth Manager at Annex Wealth Management.

As a Wealth Manager, my job is to serve as the Annex team’s main contact for a group of clients, by getting to know each of them and their unique needs, and by making sure they are benefitting from, and to introduce them to all of the services Annex has to offer.

I am honored to serve as Guest Editor of Axiom on Father’s Day, 2021. About 23 years ago I married into an amazing family, with my wife, Linda, and three stepchildren. Now all of them are married and have children of their own, five in all, ranging in age from (almost) 2 to 4.

Poll Recap: Have you booked a stay with Airbnb or VRBO?

Are seniors starting to get the hang of Airbnb?

According to Airbnb, senior adults are the fastest-growing segment of travelers. Prior to the pandemic, the percentage of seniors booking lodging on Airbnb was growing at strong double-digit annual rates. Many retirees and other senior adults are also serving as hosts.

In our latest poll, we asked readers if they’ve booked a stay with Airbnb or VRBO – the majority of respondents were above 60, and only 44% of them answered yes.

Maybe it’s time to consider staying in a private home versus a hotel on your next vacation. In addition to more space and privacy, Airbnb’s are often generally more convenient for seniors. Guests can park in the driveway, close to their room and avoid going up and down elevators with luggage. However, some find renting a little too adventurous for their taste – as quality standards of a rental are a gamble compared to a trusted hotel chain.

What about hosting? Renting out your home or an extra room could provide a new source of retirement income. More than 400,000 seniors are currently serving as hosts for Airbnb rentals, a number that’s rising. Airbnb says seniors are also among the most favorite hosts, with 85% of them earning the top five-star rating from guests.

https://thisretirementlife.com/2021/02/11/seniors-benefit-from-airbnb-and-vrbo/

This week’s Ask Annex comes from Mary, who asks:

“What (if any) differences are there between Roth IRAs and Roth 401(k)s?”

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We asked Annex Wealth Management’s Tom Parks, AIF®, CRPS®:

It’s probably easier to start with the similarities between these two retirement savings vehicles.  The tax treatment of Roth IRAs and Roth 401(k)s is the same. In each case, income taxes are owed on the contribution amount in the year in which the contribution is made (including contributions made to a Roth IRA prior to tax filing that are attributable to the prior tax year.)   

Assuming all legal qualifications have been met, distributions of principal and earnings from each account type are made tax-free.

Two of the biggest differences between the two account types are the annual contribution limits and eligibility to contribute based on income. 

Contribution limits for Roth IRA are $6,000 + $1,000 Catch-up for individuals age 50 and older while Roth 401(k)s offer a maximum annual contribution of $19,500 + $6,500 Catch-up for individuals age 50 and older.

While there is a phase-out income limitation for Roth IRAs depending on marital status and modified adjusted gross income, there is no such income limitation on Roth 401(k) contributions.   

Required Minimum Distributions (RMD) rules also vary between the two. Whereas Roth IRAs are not subject to RMDs, Roth 401(k) accounts are. Also, Roth IRAs allow for premature penalty-free distributions under certain circumstances, while Roth 401(k) accounts are subject to all regulatory restrictions applicable to 401(k) accounts and plans-specific limitations.  

There’s a tremendous amount of nuance associated with each of these conditions. Before you contribute to or take a distribution from any qualified account, we encourage you to discuss your situation with an advisor you can trust.

– Tom Parks, AIF®, CRPS®