Making Medicare work for clients
Retirees who earned at least 40 work credits are entitled to Medicare Part A and they can pay for Part B coverage through their Social Security checks, according to this article on CNBC. Private insurers are offering Medicare Advantage plans, which are increasingly becoming popular among retirees. Although these supplemental plans have lower co-payments and more predictable costs, clients are advised to compare their coverage options before signing up, says an expert.
Why clients should think like a team when saving for retirement
A study has found that households put their retirement savings in tax-advantaged accounts, such as 401(k)s and IRAs, that are more likely in the husband's or primary earner's name, according to this article on MarketWatch. This could cause problems, as spouses make separate retirement planning decisions and become unaware of each other's contributions or assets, researchers say. Couples who want to optimize retirement planning should “consider the entire household portfolio together, accounting for the characteristics of the retirement accounts, the age of the spouses, and income differences between spouses.”
8 things to remember when opening a 401(k)
Clients should check if their employer sponsors a 401(k) plan and sign up immediately so they can start contributing as soon as possible, according to this article from USA Today. They may want to sock away as much as 15% of their wage income or contribute enough to get their employer's matching contribution. They should avoid making early withdrawals and cashing out their assets if they change jobs. Clients should also get involved in picking the type of investments they own and maintain a flexible view of retirement.
This tax trick could be incredibly useful this year
From a tax perspective, a Roth IRA conversion is a great strategy for clients who want tax-free distributions in retirement, according to this article from Money. Clients who use this strategy this year also have the option to undo the conversion until Oct. 15, 2018. Investors may re-characterize converted assets if new laws lower income tax brackets and make the conversion less valuable. Moreover, if market prices drop after the conversion, a re-characterization “can save you from paying taxes on value you no longer have,” says an expert.
Retirement saver's credit an overlooked tax break
Many clients who make contributions to a 401(k) plan or an IRA are unaware that they qualify for the saver's tax credit if their income is below a certain limit, according to this article from Morningstar. Single taxpayers can claim as much as $1,000 in saver's credit, while the tax break could mean up to $2,000 in savings for couples filing jointly. This means that 401(k) participants reduce their taxable income by making the contributions and qualify for the saver's credit that can further lower their tax bill.
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