Our daily roundup of retirement news your clients may be thinking about.

3 mistakes people make with retirement withdrawals
Not tapping tax-deferred retirement accounts until the age of 70 1/2 can be a wrong move, as required minimum distributions can be big enough to push retirees to a higher tax bracket, according to this article on Motley Fool. Many seniors also make the mistake of not creating a withdrawal plan that matches their spending needs. Another misstep that retirees make is not factoring in the tax implications of taking distributions from multiple accounts with different tax treatments.

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When you should — and shouldn’t — tap your Roth IRA
Although investors can tap into their Roth IRA without facing taxes and penalties for non-retirement purposes, clients should consider other funding sources before withdrawing from the account, according to this article on Money. Clients may be better off taking a loan if the interest rate is lower than the potential investment return in the Roth IRA. Investors should also remember that the Roth IRA is meant as a source of aftertax income in retirement. “The younger you are, the better a Roth IRA is because of the ability to take a little acorn and turn it into a very big oak tree. You end up paying taxes on the acorn, not the oak tree,” says a certified financial planner.

Marriage and Roth IRA contributions
Regardless of their filing status, a couple who married any time this year may not be allowed to contribute to a Roth IRA, as they are subject to the joint income limits for Roth contributions, according to this article on Kiplinger. Either spouse may not also contribute to a Roth IRA even if their individual income is below the threshold. However, the couple has the option to make nondeductible contributions to a traditional IRA and move the funds to a Roth. A Roth rollover may still trigger a tax bill if a portion of the transferred funds comes from the deductible contributions to a traditional IRA.

Renting in retirement may be a good idea after all
Many retirees opt to rent a home instead owning one, as homeownership remains costly, according to this article on Morningstar. Renting a house enables seniors to reduce their housing costs and avoid the responsibility of homeownership, which includes maintenance expenses and property taxes. However, owning a house has its advantages, such as having home equity that they can tap when they need income. "It makes sense to buy in areas where your total monthly mortgage plus homeowner assessments and tax is less than the rent paid," says an expert.

Estate Planning: Leaving a home to heirs while you’re still alive
Setting up a trust is a smart move for seniors to transfer the ownership of their home to their adult children while they are still alive, according to this article on The New York Times. Such a move could also mean tax and health care savings, such as qualifying for Medicaid, provided they meet certain requirements. For homes worth more than the estate and gift tax exemption, seniors are advised to put the property in a Qualified Personal Residence Trust to minimize the estate tax burden.

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