Our daily roundup of retirement news your clients may be thinking about.

How home buyers can tap an IRA penalty-free
While retirement savings in IRAs can be used to buy a home, clients face different rules, depending on whether the funds are withdrawn from a traditional IRA or a Roth IRA, according to this article on Kiplinger. First-time homebuyers can withdraw as much as $10,000 without taxes and penalties, and the earnings portion of the withdrawal will be exempt from taxes if the Roth account exists for at least five years. First-time homebuyers can also make penalty-free withdrawals from a traditional IRA, but the money will be taxed as ordinary income.

At what age are you too old to manage your money?
A report from Boston College Center for Retirement Research says that most seniors who don't suffer from cognitive decline can continue attending to their finances in their 70s and 80s, according to this article on MarketWatch. However, older people will need help to manage their money, particularly those who assume the role after the death of a spouse, the study found. “[M]ost people with a cognitive impairment will need help managing their money to prevent fraud or abuse and providing this assistance effectively will require overcoming several obstacles.”

The best funds for your client's 401(k)
Clients stand to benefit the most from their 401(k) plan if it offers flexible investment options that include individual stocks, exchange-traded funds and mutual funds, according to this article on Motley Fool. However, most plans don't offer this flexible brokerage option but may provide an investment menu that includes low-cost index funds, which enable investors to track a specific market. Actively-managed funds with a solid performance record and below average fees may also be good investment candidates for a 401(k), and clients may want to invest outside, such as an IRA.

How to build a simple but effective retirement portfolio
Index funds are low-cost investment options that offer instant diversification for a well-balanced portfolio, according to this article on CNNMoney. Retirement investors who want to rely chiefly on these funds are advised to keep their index-fund portfolio simple and limit it to a total U.S. stock market index fund and a total U.S. bond market index fund. A total international stock index fund can reduce the volatility of the stock portion of their portfolio, as the shares of different countries rise and fall at the same time.

Ask Larry: How far back can I claim widow's benefits?
Clients who failed to apply for Social Security widow's benefit right after their spouse died are entitled to benefits for up to six months before the month they submit the application, according to this article on Forbes. They qualify for the benefit if they reach the age of 60, but the benefit will be reduced if they file before reaching their full retirement age. However, filing for the widow's benefit at FRA may not have optimal results because of the RIBLIM formula.

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