Proposed law could change rules for IRA withdrawals
Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about.
Lawmakers are poised to approve legislation that includes a provision that would raise the age for required minimum distributions from IRAs to 72 from 70 1/2, according to this article on Kiplinger. An expert says that older workers with higher income would benefit from the proposed change because they could save money in a traditional IRA and then convert the funds to a Roth account. Clients would face taxes on the earnings portion if they only have one traditional IRA, and owe no tax liability for earnings once the money is in the Roth account, the expert adds.
Clients can stretch their retirement savings the furthest in this state
Seniors can have the most comfortable retirement in Mississippi, where housing expenses and cost of living is more affordable compared with other states, according to this article on CNBC based on an analysis by GOBankingRates. When relocating to another state to reduce overall costs in retirement, seniors should not just consider food and housing, but also account for other factors such as state taxes. Some states impose taxes on retirement income, estate and inheritance taxes, while Social Security benefits are taxed in Colorado, Connecticut and 11 other states.
How clients can keep their heirs from blowing their inheritance
Seniors who intend to leave a sizeable legacy to their loved ones should consider using a spendthrift trust, writes an expert on Kiplinger. In a spendthrift account, they can designate a trustee who is authorized to control how the heirs will use the funds, says the expert. This arrangement will be useful not only for beneficiaries with spending problems, but also for those who are financially inexperienced or facing issues like substance abuse.