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11 Common Roth IRA Mistakes Entergy Employees Should Avoid

Healthcare Provider Update: For Entergy, the healthcare provider is typically UnitedHealthcare, which offers a range of health insurance plans to its employees and their families. As the backdrop of rising healthcare costs intensifies, Entergy may face significant healthcare cost increases in 2026. With the upcoming expiration of enhanced federal premium subsidies, millions of Americans could experience a staggering jump in monthly out-of-pocket costs-potentially exceeding 75% for those benefiting from the Affordable Care Act marketplace. Factors contributing to these surges include aggressive premium hikes from major insurers, coupled with higher medical costs attributed to inflation and increased healthcare utilization. As such, it will be imperative for Entergy and its employees to strategize and prepare for these escalating expenses to mitigate financial impacts in the coming year. Click here to learn more

'Entergy employees should consider contributing to both a Roth IRA and a 401k to optimize tax-free growth and enhance retirement savings, while remaining mindful of contribution limits and withdrawal guidelines to avoid costly penalties.' – Paul Bergeron, a representative of The Retirement Group, a division of Wealth Enhancement.

'Entergy employees can enhance their retirement planning by using a Roth IRA alongside their 401k, while avoiding common mistakes like exceeding contribution limits and failing to update beneficiary information.' – Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

Common mistakes to avoid when managing a Roth IRA
Key differences between traditional and Roth IRAs
Strategies for optimizing Roth IRA benefits for Entergy employees

One of the best ways for Entergy employees to save for retirement is through an individual retirement account (IRA), with the Roth IRA standing out for its potential to provide tax-free withdrawals during retirement. However, managing a Roth IRA effectively requires a solid understanding of its rules. Errors such as incorrect beneficiary names, missed withdrawal guidelines, or exceeding contribution caps can result in penalties or the loss of tax-free benefits. To help your Roth IRA reach its full potential for long-term wealth creation, here are 11 common mistakes Entergy employees should avoid and tips on how to prevent them.

Important Takeaways

- Contributions to a Roth IRA must be based on earned income and are subject to income limits.
- A 6% annual penalty on excess contributions may apply if you exceed the contribution limits.
- While beneficiaries must follow withdrawal rules, account holders are not required to take required minimum distributions (RMDs) during their lifetime.
- Converting a traditional IRA to a Roth IRA can offer long-term tax benefits when done correctly.

Understanding the Differences Between Traditional and Roth IRAs

Before diving into the common mistakes, it's essential to understand the distinctions between a Roth IRA and a traditional IRA. With a Roth IRA, you pay taxes on the money before it is deposited, as contributions are made with after-tax dollars. However, if you meet the conditions of being over 59½ and having held the account for at least five years, both your original contributions and earnings are typically tax-free when you withdraw in retirement.

On the other hand, a traditional IRA allows you to make tax-deductible contributions, but taxes are due when you withdraw funds in retirement. You must also begin withdrawing minimum payments from a traditional IRA at age 73, which will increase to 75 starting in 2033. Unlike traditional IRAs, Roth IRAs have no distribution requirements during the account holder’s lifetime, which is beneficial for asset transfer purposes.

With certain exceptions, including for spouses and minor children, beneficiaries of Roth IRAs are required to withdraw the full balance within ten years after the original account holder’s death, following the SECURE Act of 2020. Understanding these rules is critical for both Entergy employees and their heirs.

1. Not Making Enough Money to Contribute

To contribute to a Roth IRA, Entergy employees must have earned income—like wages or income from self-employment. The contribution limit is based on the amount of money you make each year. Roth IRA contribution limits are generally $7,000 for those under 50 and $8,000 for those 50 and older. Income from dividends, interest, or rental income doesn’t count toward the contribution limit.

If you are married and file jointly, you may also be able to contribute to a non-working spouse’s Roth IRA, as long as the total contributions don’t exceed the combined earned income.

2. Making Too Much Money to Contribute

Your eligibility for a Roth IRA is also determined by your modified adjusted gross income (MAGI). The IRS phases out direct contributions to Roth IRAs once you reach certain income thresholds. These limits are adjusted for inflation each year. The income phase-out ranges for 2025 are:

- $150,000 to $165,000 for single filers and heads of households
- $236,000 to $246,000 for married couples filing jointly
- $0 to $10,000 for married individuals filing separately (if they live with their spouse)

If your income falls within these ranges, your contribution limit may be reduced. If your income exceeds the highest limit, you cannot contribute to a Roth IRA.

3. Failing to Help Your Spouse

Although you can only contribute to a Roth IRA with your own earned income, there is an exception for married couples. If the working spouse earns enough to fund both contributions, they can contribute to a non-working spouse’s Roth IRA. This strategy can be particularly useful for couples looking to increase their retirement savings, potentially doubling their contributions over time.

4. Over-Contributing

If you exceed the Roth IRA contribution limit, a 6% penalty will be charged on the excess contribution until it is corrected. To avoid penalties, withdraw the excess contribution (along with any earnings on it) before you file your tax return.

If you miss the deadline for withdrawal, you can carry the excess contribution forward to the next year’s limit. Staying within the contribution limits helps you take full advantage of your Roth IRA without unnecessary costs.

5. Early Withdrawal of Earnings

Roth IRA contributions are made with after-tax dollars, so you can withdraw your contributions at any time without tax penalties. However, if you withdraw earnings before age 59½ or before the account has been open for at least five years, you may incur a 10% penalty along with income taxes.

There are exceptions to the penalty for certain situations, such as qualified educational expenses or first-time home purchases. While the 10% penalty can be avoided in these cases, income tax may still apply.

6. Violating the Rollover Rules

The IRS has a 60-day limit for rollovers between IRAs. You can only perform one rollover within a 365-day period. Direct transfers between IRAs don’t count toward this limit and are not subject to the same restrictions.

Exceeding the rollover limit can result in tax penalties and, in some cases, the loss of your tax-deferred status. Be sure to follow the rollover rules carefully to avoid penalties.

7. Changing the Money on Your Own

Rollovers can be direct or indirect. A direct rollover involves moving the money directly from one account to another, which eliminates the risk of missing the 60-day deadline.

An indirect rollover requires you to temporarily hold the money before transferring it to the new account. If you don’t deposit the funds within 60 days, you’ll face taxes and penalties.

8. Not Considering a Backdoor Roth IRA

If you make too much money to contribute directly to a Roth IRA, you can still fund one through a strategy known as a 'backdoor Roth IRA.' This involves making non-deductible contributions to a traditional IRA and then converting it to a Roth IRA. Since earnings on the conversion are taxable, it’s important to complete the conversion as quickly as possible to mitigate taxable gains.

For high-income Entergy employees who want to take advantage of Roth IRAs despite income limits, the backdoor Roth IRA may be a valuable option.

9. Ignoring Beneficiary Designations

Beneficiary designation is a critical but often overlooked part of managing a Roth IRA. If beneficiaries are not updated, or if the account holder fails to designate beneficiaries after significant life events such as marriage or divorce, the Roth IRA may have to go through probate. This can delay the transfer of assets and incur additional expenses for your heirs.

Review your beneficiary list regularly and make any necessary changes to help your assets pass smoothly to your intended heirs.

10. Not Withdrawing Inherited Roth Funds

The SECURE Act of 2019 changed the rules for inheriting Roth IRAs. Beneficiaries, excluding spouses, must withdraw the entire balance of the inherited Roth IRA within 10 years. Some exceptions apply, such as for minor children, but this 10-year rule generally applies.

It’s crucial for beneficiaries to understand the withdrawal timeline to avoid tax penalties. Withdrawals are typically tax-free if the account has been open for at least five years.

11. Ignoring the Benefits of a Roth When You Already Have a 401k

Many Entergy employees may be unaware of the benefits of contributing to a Roth IRA in addition to their 401k. While 401k plans often provide employer matching contributions, Roth IRAs offer significant tax-free growth potential and more flexibility in retirement planning.

Contributing to both a 401k and a Roth IRA can help increase retirement savings and provide a diverse range of tax benefits.

In Conclusion

Roth IRAs offer numerous advantages, including tax-free withdrawals, no required minimum distributions during your lifetime, and the ability to transfer assets to heirs with minimal tax impact. However, to fully benefit from these advantages, it’s important to avoid common mistakes like over-contributing, ignoring withdrawal rules, or neglecting to update beneficiary information. By being vigilant about the regulations and actively managing your Roth IRA, you can play a key role in shaping your future.

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Sources:

1. Russell, Rob. '8 Roth IRA Mistakes To Avoid.' Forbes , 30 May 2014, www.forbes.com/sites/robrussell/2014/05/30/8-roth-ira-mistakes-to-avoid/ .

2. Backman, Maurie. '11 Mistakes to Avoid With Your Roth IRA.' Investopedia , 10 Apr. 2015, www.investopedia.com/articles/retirement/041015/11-mistakes-avoid-your-roth-ira.asp .

3. O'Connell, Brian. '10 IRA Mistakes to Avoid.' U.S. News & World Report , 25 Mar. 2025, money.usnews.com/money/retirement/articles/10-ira-mistakes-to-avoid.

4. Schlesinger, Jill. '5 Roth IRA Investments You Should Always Avoid.' Forbes , 24 Apr. 2019, www.forbes.com/sites/jillsschlesinger/2019/04/24/5-roth-ira-investments-you-should-always-avoid/ .

5. Hannon, Kerry. 'How a Roth IRA Conversion Can Help You Pass On More Wealth.' Money , 22 Apr. 2016, money.com/money/retirement/article/how-a-roth-ira-conversion-can-help-you-pass-on-more-wealth/.

How does Entergy Nuclear Operations, Inc. determine the eligibility criteria for employees participating in the pension plan, and what specific conditions must be met for an employee to qualify for benefits under Appendix G of the Plan?

Eligibility Criteria for Pension Plan: Entergy Nuclear Operations, Inc. determines pension eligibility based on Vesting Service and age. Employees generally become 100% vested after five years of service or upon reaching age 61 while employed. Special provisions may apply to employees who participated in the Vermont Yankee Plan as of July 31, 2002(Entergy_Nuclear_Operati…).

What are the specific steps and necessary documentation required for an employee of Entergy Nuclear Operations, Inc. to commence their pension benefits once they reach retirement age, and how does this process differ for those with previous employment at other participating companies?

Commencing Pension Benefits: To commence pension benefits, an employee must file an application with the Entergy Pension Resource Center (EPRC). This includes providing necessary documentation, such as proof of age and employment history. Employees who have worked for other participating companies must account for service under prior employers, which may impact the pension calculation(Entergy_Nuclear_Operati…).

In what ways does Entergy Nuclear Operations, Inc. ensure that employees understand their rights under the Employee Retirement Income Security Act (ERISA), and what resources are available for employees seeking clarification on their pension benefits?

ERISA Rights and Resources: Entergy Nuclear Operations, Inc. ensures employees understand their rights under the Employee Retirement Income Security Act (ERISA) by providing access to the plan documents and offering assistance through the Entergy Pension Resource Center. Employees can request clarification on pension benefits by contacting EPRC(Entergy_Nuclear_Operati…).

How does the non-bargaining and bargaining employee classification at Entergy Nuclear Operations, Inc. impact the pension benefits available, and what should employees consider when planning for retirement in light of these classifications?

Impact of Non-Bargaining and Bargaining Classifications: The classification between non-bargaining and bargaining employees affects pension benefits. Non-bargaining employees are covered under Appendix G of the Plan, which may provide different accrual rates and benefit options compared to bargaining employees. These classifications impact retirement planning, as different rules may apply depending on the classification(Entergy_Nuclear_Operati…).

What provisions are in place at Entergy Nuclear Operations, Inc. for beneficiaries to receive benefits upon an employee's death, and how do these benefits differ based on whether the employee had already commenced their pension?

Death Benefits for Beneficiaries: In the event of an employee's death, the Entergy pension plan provides benefits to beneficiaries. If the employee has already commenced pension payments, the form of payment selected will determine the survivor benefits. If the employee passes away before starting pension benefits, the spouse may receive pre-retirement survivor benefits(Entergy_Nuclear_Operati…).

How does Entergy Nuclear Operations, Inc. calculate the normal retirement pension, and what factors play a crucial role in determining an employee's monthly benefit under Appendix G of the Plan?

Pension Calculation Factors: The normal retirement pension at Entergy Nuclear Operations, Inc. is calculated using a formula based on Average Earnings and years of Benefit Service. The formula includes percentages of earnings, capped at certain limits, and service years to determine the monthly pension benefit under Appendix G(Entergy_Nuclear_Operati…).

What unique considerations should employees of Entergy Nuclear Operations, Inc. keep in mind regarding service credits, particularly if they have accrued time under a prior employer's defined benefit plan?

Service Credits for Prior Employers: Employees with service under a prior employer's defined benefit plan may have their service credited toward the pension plan at Entergy Nuclear Operations, Inc. This includes specific provisions for employees from companies like Vermont Yankee. Service credits from prior employers may affect both vesting and benefit calculations(Entergy_Nuclear_Operati…).

How does Entergy Nuclear Operations, Inc. handle the transition of employees who transfer from covered employment with the potential for pension benefits, and what impact does this have on their accrued service time?

Impact of Employee Transfers on Pensions: If an employee transfers from covered employment (i.e., eligible for the pension plan) to a position not covered by the plan, their Benefit Service is frozen. However, Vesting Service continues to accrue as long as the employee remains with the company, and previous service may impact final pension benefits(Entergy_Nuclear_Operati…).

What specific contact methods are available for employees of Entergy Nuclear Operations, Inc. to reach the Entergy Pension Resource Center for assistance regarding their pension benefits, and what type of inquiries can the center effectively handle?

Contacting the Entergy Pension Resource Center: Employees can contact the Entergy Pension Resource Center (EPRC) for assistance with their pension benefits via phone at 1-855-523-3772 or online at EPRC Website. Inquiries can include questions about benefits, beneficiary designations, and how to commence pension payments(Entergy_Nuclear_Operati…).

In what scenarios might an employee's pension benefits at Entergy Nuclear Operations, Inc. be suspended, and what steps can be taken to appeal or rectify such situations once they occur?

Suspension of Pension Benefits: Pension benefits may be suspended if an employee is rehired after retirement and works more than 40 hours in a month. Employees who experience benefit suspensions can have their pension recalculated upon final retirement, with offsets for any benefits previously received(Entergy_Nuclear_Operati…).

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

Entergy Corporation offers a robust retirement plan system for its employees, which includes both pension and 401(k) options. The Entergy Corporation Retirement Plan for Non-Bargaining Employees transitioned to a Cash Balance Plan on July 1, 2014, and underwent further amendments in 2023 and 2024. As of January 1, 2024, accrued benefits for specific participants were transferred to the Entergy Corporation Retirement Plan VI for Non-Bargaining Employees. This shift includes participants who were previously under Appendix J of the former retirement plan, now governed by the new Appendix J of Plan VI (SEC.gov). The pension plan utilizes a Cash Balance Equalization formula, which was initially implemented in 2014 and amended in 2023. The plan stipulates that employees accumulate retirement credits based on their compensation and service, with an annual interest credit added to their retirement accounts. Non-bargaining employees with at least five years of service qualify for this pension plan

Entergy announced in early 2024 a significant restructuring plan aimed at optimizing its operational efficiency. This includes streamlining operations and reducing overhead costs. The plan involves job cuts in non-essential roles and is part of a broader effort to enhance financial stability amid changing energy market conditions. Source: Business Insider

In 2022, Entergy Corporation granted stock options and RSUs as part of their long-term incentive plan. Stock options were available to executives and senior management, while RSUs were provided to a broader group of employees including middle management and high performers. Entergy typically uses the acronym "SO" for stock options and "RSU" for restricted stock units.

Entergy Health Benefits Overview 1. Official Website Website: Entergy Careers Benefits Information: Entergy offers a comprehensive benefits package that includes medical, dental, and vision coverage. They provide a range of plans with varying levels of coverage and cost-sharing options. Employees can also access wellness programs and preventive care services. 2. Benefits Information Website: Entergy Benefits Summary Benefits Information: Entergy's benefits summary highlights health insurance options, including PPO and HMO plans, a Health Savings Account (HSA), and Flexible Spending Accounts (FSA). They also offer mental health support and employee assistance programs. 3. News and Updates Website: Business Insider Recent News: In 2023, Entergy updated its health benefits plan to include enhanced telehealth services and expanded mental health resources in response to increased employee demand and well-being concerns. 4. Healthcare Terms and Acronyms Website: HR Dive Healthcare Terms: Common terms include HSA (Health Savings Account), FSA (Flexible Spending Account), PPO (Preferred Provider Organization), HMO (Health Maintenance Organization), and EAP (Employee Assistance Program). 5. Employee Healthcare News Website: Employee Benefits News Recent News: In 2024, Entergy introduced new wellness initiatives, such as on-site health clinics and enhanced maternity benefits, aimed at improving overall employee health and reducing absenteeism