Clients could be up against a deadline that will trigger a big tax penalty
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You could be up against a deadline that will trigger a big tax penalty
Retirees aged 70 1/2 and older have until Dec. 31 to take required minimum distribution from their traditional retirement accounts or they will face a tax penalty equivalent to 50% of the RMD amount, according to this article on CNBC. They are advised to take the mandatory distribution days before the deadline to ensure that they get their withdrawal processed on time. "There's always those who wait until the last minute, and then they find that certain financial institutions or their advisors have a cut-off date," says IRA expert.
For American workers, 4 key retirement issues to watch in 2019
2019 is expected to be a turning point that will help more workers secure their retirement, according to this article from The New York Times. More states are likely to establish state-run retirement programs for workers who have no access to 401(k)-like plans, while Congress has formed a committee that will work to save pension plans covering 1.3 million workers from insolvency woes. The SEC is poised to adopt regulations imposing fiduciary standards on retirement guidance next year, while lawmakers are to tackle legislation that would address Social Security's looming financial shortfall.
‘Just unbearable.’ Booming job market can’t fill the retirement shortfall
Despite the rising employment rate, many seniors are having a hard time landing a late-career job, hurting their ability to keep up with their savings goals and secure their retirement, according to this article from The Wall Street Journal. An analysis of government data has found that nearly eight million seniors either are unemployed or settle in low-quality jobs that don't offer much to help them prepare financially for the golden years. An economist also notes that older workers' income after becoming jobless for at least a month drops by 27% on average.
Leaving a job? How to decide if you should do a 401(k) rollover or not
Clients may be better off rolling over old 401(k) assets into a new IRA once they change jobs, if the move will enable them to get more investment options and lower fees, according to this article from Kiplinger. Such an option will also help clients consolidate their accounts, receive professional advice and do a Roth conversion to boost their aftertax income in retirement. By moving the funds to an IRA, they can take a qualified charitable distribution to donate the mandatory withdrawal when they are 70 1/2 and older, allowing them to avoid taxes on the distribution.