Workers should urge their employers to offer a Traditional Aftertax savings option in their 401(k) plans to save for emergency and unforeseen expenses, writes a Forbes contributor. “When and if you need to use the money, your principal is returned to you tax free and any increase in value is taxed as income in the year you receive it,” writes the expert. “There are no restrictions to hold money in this account until retirement age. You also don’t need a specific reason to access the money, unlike hardship distributions from 401(k) plans.”
Clients who want to maximize their tax savings this year are advised to increase contributions to their tax-deferred retirement accounts before Dec. 31, according to this article on CNBC. They should also consider charitable giving, while retirees who do not need the required minimum distributions from their retirement accounts can donate the money directly to a charity to avoid the taxes on these distributions. Another strategy is to give cash gifts to loved ones, as taxpayers are entitled to an annual gift tax exclusion.
This Kiplinger article offers 10 tips for retirees to lower their tax liability and penalties on their required minimum distributions. They should ensure that they get the right RMD amount, withdraw the money from tax-deferred retirement accounts, and avoid waiting the last minute to take the withdrawals. Retirees who turn 70 1/2 this year should also ensure that they take their first RMD by Dec. 31 even if they have time until April to take the distribution. Seniors who are still working past the age of 70 1/2 have to take RMD from their old retirement plans and IRAs but not from their current plans.
Saving for retirement while sending children to college can be a daunting task for parents, but it is not impossible if they have a good plan, according to this article on personal finance website Motley Fool. Parents should start building their nest egg as early as they can to give their money more time to grow through compounding […]
Source: On Wall Street: Feed