Pay taxes now or later is often a consideration when people decide how to save for retirement, but Congress decided the only option for some older Americans should be now for certain retirement accounts.
The Internal Revenue Service is allowing people who inherited an individual retirement account after 2019 to skip a required minimum distribution this year, but most still must empty the account within 10 years.
Millions of high-earning Americans are slated to lose a popular tax deduction starting next year.
Savers ages 50 and older can make catch-up contributions in their 401(k) accounts each year, with eligible workers allowed to put an extra $7,500 into their accounts, for a total of $30,000, this year.
Are you familiar with Roth IRAs? If you’re not, you should be, because Roth IRAs are a great way to get tax-free income after you retire.
The Secure 2.0 Act, passed in December, contains more than 90 provisions affecting retirement-savings plans, such as individual retirement accounts and 401(k) workplace plans.
Advisors should take advantage of today’s low tax rates — and “do Roth conversions while taxes are on sale!” according to Ed Slott of Ed Slott & Co.
Every advisor, Slott told ThinkAdvisor Tuesday, “should be having this conversation with their clients. This may only last for the next three years (2023, 2024, and 2025). After that, tax rates are scheduled to revert back up to previous levels.”
What’s more, like 401(k)s, IRAs provide tax advantages to those who invest in them. If utilized properly, the Roth version of an IRA comes with tax-free withdrawals in retirement. And withdrawing money in retirement without owing any tax is the “holy grail,” says Ed Slott, a certified public accountant and founder of IRAHelp.com.
“You’re still supposed to pay an estimate of what you think you might owe,” says Ed Slott, a certified public accountant and founder of IRAHelp.com. If you fail to pay an outstanding bill by tomorrow, the IRS will tack on penalties and interest payments to what you owe.
Secure 2.0, the new legislation designed in part to beef up retirement savings, contains nearly 100 provisions—92 to be exact—pertaining to retirement.And even those who eat, breathe and sleep all things retirement are finding it a bit overwhelming.
This week, President Joe Biden released a proposed federal budget that would raise taxes on the wealthiest Americans to help address the solvency of key federal government entitlement programs such as Medicare and Social Security.
