6 tax-efficient ways clients can keep more of their retirement savings
Our daily roundup of retirement news your clients may be thinking about.
6 tax-efficient strategies to keep more of your money in retirement
A reverse rollover from IRAs to other retirement plans is an option that enables investors to improve their tax efficiency, as this option helps reduce their taxable required minimum distributions in retirement, according to this article on Kiplinger. Other strategies that also allow them to be more tax efficient in building their nest egg are making qualified charitable distributions, doing Roth conversions, and making after-tax contributions to their 401(k) plans. Contributing to a health savings account and making non-deductible contributions to an IRA are other tax-efficient strategies to save for retirement.
The overlooked benefits of Roth investment accounts
Investors may have overlooked some of the advantages offered by a Roth IRA, according to this article on CNBC. These benefits include tax- and penalty-free withdrawals even before age 59 1/2, no required minimum distributions and more flexible distribution for beneficiaries. A Roth conversion is also allowed for investors with traditional IRAs, with the option of undoing the conversion until the deadline of extended returns of the year after the year the assets were converted.
Two-thirds of Americans aren’t putting money in their 401(k)
A study by the U.S. Census Data has found that only about a third of workers are contributing to their employer-sponsored 401(k) plan, according to this article on Bloomberg. Moreover, only 14% of employers are offering retirement plans to their employees, the study also found. Bigger employers are more likely than their smaller counterparts to sponsor a retirement plan, with 79% of workers hired by companies with a retirement plan. Only 41% of workers with access to a retirement plan are making 401(k) contributions, the study found.
Grandparent 529 plans: A smart strategy for RMDs
Retirees may want to transfer a portion of their assets in tax-deferred retirement accounts to a 529 college savings plan to reduce their required minimum distributions, according to this article on Forbes. While donating the RMDs directly to a charity is a tax-efficient move, retirees may just need the money in the future. Clients who transfer their retirement funds to a 529 plan can expect their savings to grow tax-deferred and still have access to the money to cover contingency needs.
Are REITs right for your retirement portfolio?
Real estate investment trusts are good investment options, as they provide income and long-term growth, according to this article on Yahoo Finance. Retirement investors may take advantage of REITs and include them in their portfolio, depending on their need for diversification, liquidity, and dividends.