Our daily roundup of retirement news your clients may be thinking about.
People who will reach the age of 55 next year will be considered senior citizens and thus entitled to the discounts in restaurants, groceries and entertainment businesses. Also, people who will turn 55 in 2016 can take advantage of "separation from service" rule and penalty-free distributions from retirement savings plans as long as they meet certain requirements. Those who are mulling such an approach are allowed only if they resign from their job during the year they turn 55. They also need to remember that such distribution will trigger taxes and if it is part of their plans to retire early, they do not yet qualify for Social Security retirement benefits until they reach the age of 62. –The Motley Fool
Pre-retirees need to engage in tax planning so they can reduce their tax liability by the time they start taking required minimum distributions from their retirement accounts. They can avoid income tax high brackets when they take an RMD by taking distributions from these accounts while they in low-income tax brackets at ages 60 and 70. “We see a fair number of clients who retire before 70 who can benefit by paying tax at lower brackets instead of waiting to tap the IRA at 70 in higher brackets,” says of Stevens Wealth Management CEO Sue Stevens. –MarketWatch
Clients who consider converting certain assets in the traditional IRA to a Roth account are advised to consult a financial or tax profession to make sure such conversion would mean lower income tax liability. Making an IRA conversion is a good move if retirement savers are currently in a lower tax bracket than in the previous years. Clients also need to account for their net operating loss, after-tax money in their 401(k) plans, their investments' performance and their future tax brackets. –USA Today
Santa Barbara, Calif., Sarasota, Fla., and Plano, Texas, lead the 10 American cities that are best locations to retire according to Livability.com. Taxoma, Wash., Carson City, Nev., and Hillsboro, Ore., are also included in the list, which is based on factors such as weather, taxes and health care. Know the other cities that are also friendly for retirees. –CNBC
Because of changes to Social Security rules, a 66-year-old client can no longer file for and suspend his retirement benefits to enable his 62-year-old spouse to collect a spousal benefit on his record. Also, if the spouse starts collecting her spousal benefit, she would be "deemed" to be applying for her own retirement benefit. Also, since she is working, she would be subject to the earnings test, which could reduce her retirement benefit. –Forbes
Register or login for access to this item and much more
All Bank Investment Consultant content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access