70-Year Old IRA Owners: Avoid This Expensive Mistake

Photo credit: Simon Wijers. Unsplash.

In 2017 the first baby-boomers turned 70. Happy birthday! However, if you had your 70th birthday between January 1 and June 30 of this year, the IRS says you must take your first IRA “required minimum distribution” (aka RMD) this year as well.

Well, OK. Technically, you really have until next year. More about that below.

5 Reasons Why You Should Contribute to Your Company’s Roth 401(k)

Since 2006 retirement savers have been able to contribute to Roth accounts via their retirement plans at work. Known better as the Roth 401(k), these unique retirement plans allow you to save after-tax dollars in an account that grows tax-free and allows for tax-free distributions during retirement.

Not every employer offers the Roth 401(k) as a feature available in their retirement plan, but when they do you should take advantage of the opportunity.

Here are 5 reasons why you should contribute to your company’s Roth 401(k).

What To Do When You Inherit an IRA

ben-white-197668Imagine getting hit with a $500,000 tax bill just because you checked the wrong box on a form.

If you inherit an IRA, what you do next determines how much tax you will owe on your inheritance. Make a mistake and the entire IRA balance becomes taxable. In addition to owing Federal income taxes on the inherited IRA, you may also owe state income tax and possibly even estate taxes when you inherit an IRA from someone other than a spouse.

Tally it all up and half or more of the IRA could end up going to the IRS.

The average IRA balance varies by age, but for people over age 65 the average balance exceeds $212,000.  In many cases IRAs can exceed $1 million or more during the IRA owner’s lifetime. A wrong move by the beneficiary could result in a gut-wrenching six-figure tax bill.

When you inherit an IRA, follow these three steps to avoid a tax disaster.

How To Create Sustainable Retirement Income

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Roger and Elizabeth were both approaching their mid-60’s, and they were looking forward to retiring soon.

Roger was a marketing manager at a Twin Cities-based Fortune 500 company. He worked there his entire career and had generous retirement benefits: 401(k), stock purchase plan, even a pension.

His wife Elizabeth was an educator for a local school district. She also had a retirement savings plan at work as well as a pension and some other savings. Like a lot of families they had other assets in addition to what they had at work – IRAs, a mutual fund account, an old 401(k), and a comfortable home that was nearly paid for.

After listening to them explain their story, I asked Roger and Elizabeth how I could help.