When the Covid-19 pandemic arrived in 2020, many individuals took advantage of a federal tax break and withdrew money from their retirement accounts.
If they repay the funds—which isn’t required—by next year, they’ll get another tax break, too.
If you are younger than age 59½ and want to withdraw money from your individual retirement account, there are several exceptions that could allow you to do so without incurring the 10% early-withdrawal penalty from the IRS.
One such exemption being used more often is a so-called 72(t) plan.
Doing a reverse rollover — in which money is rolled from an IRA to a 401(k) — still makes sense for clients that want to take advantage of a “backdoor” Roth IRA conversion or delay required minimum distributions, according to Ed Slott and Ian Berger of Ed Slott and Co.
For years, fewer teenagers were looking for summer jobs, opting instead to bolster their college applications with academic programs or unpaid internships. But as the economy bounced back from the pandemic, employers were almost begging for workers and some opportunities were too good to pass up.
Using your individual retirement account to give to charity is a good thing. But tax snafus can ruin the good intentions.
Traditional IRAs have long been used to make qualified charitable distributions. Eligible individuals can donate as much as $100,000 a year. Such gifts can make up part or all of the donor’s required minimum distribution, or RMD. And amounts donated to qualified charities are excluded from the donor’s taxable income for that year.
Midyear can be a good time to take a halftime break and evaluate your investments — especially this year, after nearly six straight months of stock market decline.
Perhaps stock and even bond losses have exposed flaws in your portfolio. Maybe they offer the potential to adjust holdings to take advantage of new opportunities. Now also might be the time to pursue a potentially important tax strategy.
Victoria Fernandez, chief market strategist at Crossmark Global Investments, says that a recession is coming, but it’s not imminent due to the economy’s underlying strengths, including active consumers, corporate balance sheets and the labor market. While waiting for a recession to arrive late next year, Fernandez says investors should be taking advantage of down days in the market to buy up names that are on sale and better balance a portfolio to get through trouble.
Managing an inherited IRA has never been easy, and it soon could become even more complex.
The Setting Every Community Up for Retirement Enhancement Act, which took effect in 2020, requires adult children and other non-spouse heirs to deplete inherited IRAs and other tax-advantaged accounts within 10 years of the original owner’s death. Before, these heirs could take withdrawals over their life expectancy, which cut the size of annual withdrawals and allowed untapped assets to keep growing.
Has your teenager landed a summer job? Good! Now, consider putting your child’s earnings to work long term by opening a Roth individual retirement account.
It may seem odd to think about retirement savings when your child could still be wearing braces. But putting money now into a Roth I.R.A. means your child will have decades for the money to grow, tax free.
