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Rules clients should know before rolling over their pensions

Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about.

Rules clients should know before rolling over their pension
Working clients who consider taking a lump-sum distribution from a pension and rolling the money over to a retirement plan need to be familiar with IRS rules, a Forbes contributor writes. For example, they have to do the rollover to a tax-advantaged account within 60 days since they receive the lump-sum payment, he says. Workers won't owe taxes on the rollover to a traditional retirement account, but will face a tax bill for rolling the money to a Roth account.
5 IRA moves before the end of 2019
Clients cannot expect to get all of their savings in a traditional IRA, as the distributions will be subject to taxes, according to this USA Today article. Converting some of the traditional IRA assets to a Roth account can be a smart move to minimize the tax bite, as the current tax rate for converted amount is low. Retirees who want to avoid taxes on the RMD from their traditional IRAs can donate the money directly to charity and can further reduce the RMD amount by using the money to buy a qualifying longevity annuity contract. Those who inherited a traditional IRA need to take the RMD by Dec. 31 and pay the taxes.

How to use the HSA for medical or retirement savings
An HSA offers triple tax benefits and can be a powerful tool to save for health care and retirement when used correctly, according to this article in The Wall Street Journal. Clients who want to take advantage of their HSA and 401(k) should determine whether their employer offers a match in both accounts and contribute the amount to get the match. They are no longer allowed to fund their HSAs after signing up for Medicare. “Everything about retirement planning says, ‘Start young, be regular and invest.’ That’s what we want people to hear about HSAs,” says an expert.

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November 6

When do clients need to start saving for retirement?
Young clients are advised to start building their savings as soon as they finish high school to secure a comfortable retirement, says Principal Finance Group CEO Dan Houston in this Yahoo Money article. They should consider saving 13% to 15% of their annual income in their retirement plans, says the expert, adding that they should maintain a well-balanced portfolio. That’s “what wins the race in the long run,” he adds.

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