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Put Off Retirement? You Might Be Too Old for an IRA
Wage-earners are not permitted to put money into a traditional IRA in the year they turn 70 ½ according to the Kiplinger article, “Tax-Smart Ways to Save When You’re Too Old for a Traditional IRA.” But you would still be able to contribute to a Roth IRA, as long as your income in 2017 is less than $133,000 if single or $196,000 if married and file taxes jointly. In addition to the money growing tax-free in the Roth IRA with no time limit, you don’t have to take any RMDs (required minimum distributions).
You can contribute up to the amount you earned for the year (your net income from self-employment), with a maximum of $6,500—that’s $5,500 for everyone under age 50, plus $1,000 for people age 50 and older. If your earnings are well over the $6,500 maximum, you can just contribute that amount. However, if your earnings are near or under the maximum, you’ll need to know what is considered compensation and how to calculate your allowed contribution.
Read MoreIt Takes More than a Nest Egg to Protect Your Retirement
Seniors who have finally reached retirement age after decades of work and smart planning may think they’re all set once their nest egg is funded. But that nest egg needs to be protected by an emergency fund—something which most Americans seem to have forgotten during their retirement planning. Fox Business’article, “What Nest Egg? Two-Thirds of Americans Can’t Cover $1,000 Emergency,” talks about the importance of maintaining an emergency fund so you don’t need to take withdrawals from retirement accounts.
Seniors depend significantly on their retirement funds in retirement, as well as their Social Security and pensions. But rather than keeping a contingency fund of three months’ savings, retired seniors should really try to save up even more for the likely event that they need personal or medical care down the road. While it’s more difficult to save when you don’t have a steady income every month, it is possible and important.
Read MoreA Focus on Retirement & Estate Plans
As we head further into summer, many of us are heading on vacations. Some may be thinking of a more permanent vacation: retirement! This month, we’ll be discussing the important estate planning concepts you should know when it comes to retirement and qualified retirement plans, from powerful ways to plan for children and grandchildren to ways to incorporate creditor protection or how to most effectively plan for your retirement accounts.
Read MoreStrong Trust Planning is Important When One Spouse is Not a U.S. Citizen
As reported in Trust Advisor’s recent article, “Foreign Spouses Need Strong Trust Planning,” there has been a huge boost of individuals who are not U.S. citizens, but who establish residence here. They’re known as “resident aliens” under U.S. tax law. There are also non-resident, non-U.S. citizens (“non-resident aliens”) who will invest in real and personal property situated in the state. This can include a wide variety of real and personal property, from vacation homes to ownership interests in a holding or operating company.
This uptick in foreign business and personal investment means more attention to the complex federal tax requirements applicable to non-U.S. citizens for income and transfer tax purposes. In addition, there are tax issues that impact non-U.S. citizens in connection with transfers of money or property during their lifetime or at death.
Read MoreWorried About Your Children’s Marital Choices? Protect Their Inheritance with Trusts.
Trusts as a means of avoiding paying estate taxes are not as necessary as they once were. However, they have a number of other functions that have become attractive to concerned parents. When children marry and then divorce, a trust may protect an inheritance from a divorce settlement. A recent Kiplinger’s article, “A Trust Can Protect Your Adult Child’s Assets from a Failed Marriage, takes a look at how this works.
It’s not uncommon for a child to get an inheritance and combine it with assets he or she owns jointly with their spouse, like a bank account, car or house. Depending on the state in which they reside, the inheritance may become marital property subject to division in the event of a divorce. If the child’s inheritance stays in a trust account, the inherited wealth may be shielded from a divorce.
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