For those just starting out, saving for retirement can be challenging. For young workers, paying the rent and buying the week’s groceries may take priority and there is only so much money to go around. However, there is an often-overlooked tax break that may make saving for retirement more attractive.
For an area as highly regulated as IRAs and company plans, it’s not surprising that there’s a ton of abbreviated terms to keep track of. Here’s 18 common ones that you should know:
CARES Act. The Coronavirus Aid, Relief, and Economic Security Act. A law enacted on March 27, 2020 that, among other items, waived RMDs for 2020 and allowed CRDs.
CRD. Coronavirus-related distribution. A penalty-free distribution, up to $100,000, that certain COVID-affected individuals were eligible to receive from IRAs and company plans in 2020.
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Whenever there is a new administration there is a lot of uncertainty about what the change will mean for retirement accounts. In 2021, this change is happening in the middle of a pandemic that has upended the lives of most Americans and created enormous economic and psychological stress. The result has been more speculation about the future of retirement accounts than usual.
The end of 2020 is almost here. With the end of the year come certain retirement account deadlines. Here are 5 items you should have on your 2020 year-end retirement plan to-do list:
1. Do a 2020 conversion
If you are considering converting an IRA to a Roth IRA in 2020, time is quickly running out. The deadline for 2020 conversion is the end of the calendar year. There is a common misconception that a conversion can be done up until your tax-filing deadline.
One important difference between IRAs and company retirement plans is spousal protection. Except for community property states, spouses of IRA owners do not have any rights to the account. By contrast, many workplace plans must provide spouses at least some financial protection.
In the world of company plans, spouses have potentially two types of protection, depending on the type of plan.
Spousal Consent to Plan Distributions. The first type of protection requires certain plans to pay a married participant’s benefit as a specific type of annuity – unless the participant elects another form of payment and the spouse consents. The required annuity type is called a “qualified joint and survivor annuity” (QJSA). A QJSA pays a monthly benefit over the participant’s lifetime and, if the spouse outlives the participant, pays the spouse a monthly benefit over the spouse’s remaining lifetime.
On July 28, the Treasury Department announced that it was ending the myRA program. The Department issued a very brief statement saying that as part of the Administration’s effort to assess existing programs and promote a more effective government it was determined that this program was not “cost effective” due to its low enrollment.
A very common mistake on the part of IRA owners and plan participants is thinking that distributions taken because of their financial difficulties are tax and penalty free.
The internet can be a blessing and it can be a curse. It is a fantastic place to do research on almost anything, but is the information you find current and accurate? Here are five things to consider when doing internet research into retirement questions.
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