It is important for you to take an active role in your retirement planning.
Life changes and events happen that require you to update your tax and estate plans. Use the information below to see how your planning might be affected. As you can see, many items require you to take action now.
Have You Had Any of These Life Events?
- Birth, death, marriage, divorce, remarriage, or illness
- Began collecting Social Security benefits
- Layoff or new job
- A child’s marriage or divorce
- An inheritance or gift received
- Creation of a trust
- Moving, change of residence, home sale
- Change of the IRA or plan custodian
- Roth conversion
Make Sure to Talk to Your Beneficiaries About:
- Post-death distribution options and required minimum distributions (RMDs)
- Tax rules for inherited IRAs, including setting up properly-titled inherited IRAs
- Spousal beneficiary options
- Estate tax return deadlines
- Tax benefits to beneficiaries, including net unrealized appreciation (NUA) and income in respect of a decedent (IRD) deduction
Milestone Ages:
- 50 – Catch-up contributions to retirement plans and IRAs
- 50 (or 25 years of service, if earlier) – Plan exception to 10% penalty for public safety employees
- 55 – Plan exception to 10% penalty
- 59½ – 10% penalty free withdrawals
- 70½ – Qualified charitable distributions from IRAs
- 73 – RMDs and required beginning date
- 75 – 403(b) exception
Year-End Checklist:
- Evaluate the effect of this year’s market volatility.
- Be sure to take your RMD from all applicable accounts.
- Consider qualified charitable distributions.
- Check that inherited IRAs with multiple beneficiaries are split by the end of the year following the year of the IRA owner’s death.
- Check to see if enough money is withheld and/or paid in through estimated tax payments to avoid penalties. If you are short, consider withholding taxes from IRA distributions and replacing those funds within 60 days. (Watch out for the once-per-year rollover rule!)
- Rollover IRA funds to company plans where the still-working exception applies before year’s end to avoid taking RMDs on those funds next year.
- Estate planning – take advantage of annual exclusion gifts.
What does the basic process entail? An income tax refund can be directly deposited to an IRA up to the annual contribution limit. The contribution limit is $7,000 ($8,000 if age 50 or over) for 2025 and $7,500 ($8,600 if age 50 or over) for 2026. It can also be split among multiple accounts.
Avoiding Mistakes in a Divorce Retirement accounts and divorce. When a divorce occurs, the financial assets of a couple, including their retirement accounts, are often split. If mistakes are made during this process, the stress of a divorce can be compounded when one or both spouses find that they are subject to unnecessary taxes or penalties.
Choosing the Right Financial Advisor Why do you need a financial advisor? Today’s financial landscape is as complicated as ever. A good financial advisor can help you navigate this complexity so that you can make educated, informed decisions on what is best for you and your family.
Why do you need a tax professional? Managing taxes during retirement will be the single most important factor in determining your ultimate lifestyle. In addition to a financial planner and estate planning attorney, a qualified tax professional is an integral part of any planning team.
New Rules Are Here. On July 18, 2024, the IRS issued both final regulations under the 2020 SECURE Act and proposed regulations under the SECURE 2.0 Act of 2022. These long-awaited new regulations impact many parts of the required minimum distribution (RMD) rules for retirement accounts. The final regulations are effective for 2026, and the proposed regulations can be used immediately as guidance. Here are the highlights:
What is considered investment income? Investment Income: Interest, dividends, capital gains (long and short), annuities (not those in IRAs or company plans), royalty income, passive rental income, other passive activity income. NOT Investment Income: Wages and self-employment income, active trade/business income, distributions from IRAs, Roth IRAs and employer plans, excluded gain from the sale of a principal residence, municipal bond interest, proceeds of life insurance policies, veterans’ benefits, Social Security benefits, gains on the sale of an active interest in a partnership or S corporation.
What is a 60-day rollover? What is a 60-day rollover? A 60-day rollover is the distribution of funds from a qualifying retirement account payable to the account owner who then has 60 days to redeposit the funds into another qualifying retirement account.
You’ve probably heard the saying, “There’s no such thing as a bad question.” But in retirement planning, the way you frame your question often determines the quality of your answer. In this episode, we’ll share some common retirement questions, and how a simple reframing might lead to a more useful answer.
This year...
Would you rather have a million dollars today, or a magic penny that doubles every day for 30 days?
