- What Is Excess Accumulation in Qualified Retirement Plans?
Navigating the rules and regulations surrounding qualified retirement plans like 401(k)s can be complex, particularly when it comes to required minimum distributions (RMDs). When these mandatory withdrawals are not taken on time or in sufficient amounts, the funds that are not withdrawn will be considered excess accumulation and subject to tax penalties. A financial advisor… read more…
- How to Maximize Retirement Savings
Strategic planning and informed decision-making are key when it comes to how to maximize your retirement savings. By understanding the various retirement accounts available, taking advantage of employer-sponsored plans and consistently contributing to your savings, you can build a robust financial foundation for your future. Additionally, exploring tax-advantaged options and regularly reviewing your investment portfolio… read more…
- How to Make a Retirement Income Plan
When it comes to how to plan for retirement income, start by evaluating your anticipated living expenses, considering healthcare costs and taking into account the amount you’ll need for leisure activities and potential emergencies. Then, assess your expected sources of income and develop a withdrawal strategy that aligns with your lifestyle and longevity expectations. By taking… read more…
- What Is the Solo 401(k) Contribution Deadline?
A solo 401(k) plan is a powerful retirement savings tool designed specifically for self-employed individuals and business owners without employees. These plans allow for both employee and employer contributions, providing flexibility and the potential for substantial tax advantages. To fully benefit from this retirement savings vehicle, however, it’s important to be aware of solo 401(k)… read more…
- When Can My Spouse Claim Social Security Benefits?
Knowing when a spouse can claim Social Security benefits can significantly impact retirement planning. Spousal benefits allow one partner to receive a portion of the other partner’s Social Security benefits, providing financial support in retirement. By understanding the eligibility criteria, the impact of full retirement age and the effect of early or delayed claims, among… read more…
- I’m 52 With $1.6 Million in a Taxable Brokerage Account and $1.1 Million in an IRA. Can I Retire Now?
It can be financially feasible to retire when projected retirement income equals or exceeds projected retirement expenses. In many cases, withdrawals from $1.6 million in a taxable brokerage account and $1.1 million in an IRA will total more than a typical retiree’s expenses. However, much depends on the desired retirement lifestyle. Age at retirement is… read more…
- What Is an Active Participant in a Retirement Plan?
Active participation in a retirement plan refers to an individual being involved in an employer-sponsored retirement program, like a 401(k) or pension plan, during a given tax year. This status affects eligibility for certain tax benefits, including the ability to deduct contributions to a traditional IRA. Knowing whether you are an active participant and understanding… read more…
- 9 Steps to Planning for Retirement
Planning for retirement involves a series of well-defined steps that aim to maintain financial stability and offer greater peace of mind in later years. Your first step will be to set clear retirement goals. This can help you assess your current financial situation, including savings and investments. Creating a detailed budget helps track expenses and… read more…
- Differences in the Types of Retirement Plans
There are many retirement plans available to help you save for your golden years. 401(k)s, IRAs and Roth IRAs offer unique benefits and tax advantages tailored to different financial goals and employment situations. Choosing the right plan can affect your savings strategy, tax liabilities and overall retirement readiness, which is why carefully comparing the available… read more…
- How Thrift Savings Plans Are Affected by a Divorce
How thrift savings plans (TSPs) are affected in divorce depends on their value and the overall division of assets. Federal regulations govern how TSP accounts are divided, often involving a court order known as a Retirement Benefits Court Order (RBCO). These orders ensure a fair distribution of retirement savings between spouses, considering various factors like… read more…
- I’m 65 With $1.2 Million in an IRA. I’ll Get a $2,900 Monthly Social Security Benefit. What’s My Retirement Budget?
As you approach retirement, your financial focus shifts. During your working life, retirement is about goals and planning. You decide what kind of lifestyle you want, figure out what kind of income will support that spending, then build a savings and investment plan to reach those goals. That should be your retirement approach at age… read more…
- How Are Fixed Annuities Taxed?
Fixed annuities are popular for their stability and guaranteed returns, but it’s important to understand the tax implications of this type of annuity when using it as part of your financial planning. The funds you contribute to a fixed annuity typically grow tax-deferred, meaning you won’t owe taxes on the interest earnings until you start… read more…
- How Are Non-Qualified Annuities Taxed for Beneficiaries?
Non-qualified annuities offer tax-deferred growth, providing financial benefits during the annuity holder’s lifetime. When the annuity holder passes away, their beneficiary inherits the annuity, which comes with some specific tax implications. Understanding how inherited non-qualified annuities are taxed to beneficiaries is an important part of effective estate planning and tax management. Consulting with a financial… read more…
- What Is the Minimum Annuity Investment You Can Make?
Annuities offer a reliable income stream for retirees. But if you’re wondering how much it takes to buy an annuity, the minimum investment required can vary. Generally, the initial investment for an annuity starts around $5,000 to $10,000, depending on the type of annuity and the provider. Fixed annuities often have lower minimums compared to… read more…
- Factors That Determine the Amount of Your Social Security Benefits
Understanding what your Social Security benefit is based on can significantly impact your financial planning for retirement. The amount you receive hinges on several factors, including your lifetime earnings, the age you start claiming benefits, and the number of years you’ve worked. Additionally, the Social Security Administration uses a formula to calculate your benefits, which… read more…
- Retirement Plan Options for 1099 Workers
Independent contractors face unique challenges when it comes to retirement planning due to the lack of employer-sponsored plans. The good news is that there are several retirement plan options designed specifically for self-employed individuals, each with unique benefits and consideration. Popular choices include SEP IRAs, SIMPLE IRAs and solo 401(k)s, each offering distinct benefits and… read more…
- Retirement Plan Options for Nonprofits
Nonprofits have a variety of retirement plan options to help their employees save for the future. Popular choices include 403(b) plans, similar to 401(k) plans but tailored for nonprofit organizations, and 401(a) plans, which offer higher contribution limits. Additionally, SIMPLE IRAs and SEP IRAs cater to smaller nonprofits with simpler administrative requirements. Understanding the specific… read more…
- Retirement Planning Questions You Should Be Asking (FAQs)
Making a good plan, any plan, generally starts the same way: You need to ask the right questions. Whether getting a degree, finding a job, buying a house, or anything else, the right place to start is by asking the right questions. It will help you clarify what you want to achieve and the details… read more…
- Why Is It Called a 401(k)?
The term “401(k)” comes from the section of the U.S. Internal Revenue Code that established this retirement savings plan. Introduced in 1978, Section 401(k) allows employees to defer a portion of their salary into individual accounts, which can be invested in various financial products. This tax-advantaged retirement plan gained popularity because it provides employees with… read more…
- I’m 67 With $1.2 Million in a 401(k). Is It Too Late for a Roth Conversion?
Converting funds in a traditional 401(k) into a Roth IRA can provide you with tax-free retirement income, and there are no rule prohibiting conversion at any age. However, converting when you are close to or at retirement age involves some additional considerations. For one thing, you may have to let converted funds age for five… read more…
- Am I Too Late? I’m 65 and Only Have $120k Saved for Retirement
A low-savings retirement is one in which you don’t have enough money in your portfolio to generate a comfortable retirement income. For example, let’s say that you’re 65 and have $120,000 in a retirement portfolio. We’ll assume that this money is in a pre-tax 401(k). This won’t generate a livable income on its own. That doesn’t… read more…
- Does VA Disability Affect My Social Security Retirement Benefits?
As you plan for your retirement and financial future, you may wonder, does VA disability affect Social Security retirement benefits? Rest assured, VA disability benefits do not reduce the amount of Social Security retirement benefits you receive. VA disability compensation is considered an independent benefit and is not counted as income for Social Security purposes.… read more…
- What Is a Social Security Statement?
A Social Security statement is a document provided by the Social Security Administration (SSA) that outlines your earnings history and projected benefits. It serves as a comprehensive record, detailing your contributions to the Social Security system over your working life. By reviewing your statement, you can verify the accuracy of your earnings record and get… read more…
- I’m 60 and Make $150k. Should I Convert $50k per Year From My IRA to a Roth to Avoid RMDs?
There are plenty of ways to analyze your retirement strategy. Sometimes, when we have lots of concrete information, we can start by running the numbers. If X, then Y, and the next steps are to decide what risks and outcomes you’re comfortable with. But sometimes, the place to start is with questions. As you build… read more…
- A Comprehensive Guide to Planning for Retirement
When you plan for retirement, you’re preparing to one day leave the workforce. And you’ll need to decide how you’re going to pay for your living expenses after you’re no longer receiving a salary. It’s typically a decades-long process that begins with envisioning a desirable retirement, estimating what that will cost, and then amassing the… read more…