Don’t overlook the ‘kiddie tax’ when it comes to IRA beneficiaries
Clients who intend to name minor children as beneficiaries of their IRAs should take into consideration the "kiddie tax" before making a decision, writes a certified financial planner on MarketWatch. While the children won't owe taxes for the first $2,100, under the "kiddie tax" any excess of this amount will be subject to their parent's tax rate, writes the expert. "[O]ther options such as a Roth conversion before the great-grandfather passed or other assets could potentially provide the kids with tax-free income."
A tax-advantaged way to distribute employer stock from retirement plans
Clients may opt for the net unrealized appreciation distribution strategy when taking a lump-sum distribution of employer's stock from their retirement plans, writes a certified financial planner on Morningstar. This strategy enables investors to face capital gains tax instead of the higher ordinary income tax rates on the distribution, writes the expert. "If a few basic requirements are met, your client would be able to distribute the shares of stock in-kind from the retirement plan to a taxable brokerage account and pay ordinary income taxes on the stock's original tax basis."
The 4% Rule: How a good principle leads people astray
Clients are advised to have a flexible retirement income plan even if they follow the 4% withdrawal strategy, according to this article on Kiplinger. They should also calibrate their portfolio around their distribution plan. For example, assets earmarked for future withdrawals should be put in more conservative investments, while longer-term assets are invested in growth investments. Moreover, they should hold stocks in taxable account to get favorable tax treatment and bonds in IRAs.
5 strategies to help you meet your retirement goals (that don't involve saving more money)
Deciding the right age to claim Social Security is one of the factors that can help clients meet their retirement goals, according to this article on Forbes. Clients may also want to review their retirement budget and they may also consider working in the golden years. They also have the option to tap their assets, such as applying for a reverse mortgage, and they will have to decide at what age they should retire.
From REM to 401(k): A Gen X guide to retirement planning
Gen Xers who have to catch up on retirement saving are advised to start increasing their contributions to their retirement accounts, according to this article on Motley Fool. They are also advised to pick the best investment strategy for their situation. Gen Xers should also minimize or eliminate debt before they reach retirement. When paying off debt, they should also account for the taxes involved. For example, before taking the mortgage they should start with student loan as the tax break disappears when they reach certain income levels.
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