Our daily roundup of retirement news your clients may be thinking about.
When leaving heirlooms and other illiquid assets to loved ones, seniors should allow the heirs to inherit the items instead of liquidating them, writes an expert on Kiplinger. "Illiquid assets receive a step-up in cost basis that alleviates some of the capital gains tax burden even if the inheritors sell it," writes the expert. "You can also put the asset in a trust, family partnership or LLC and formalize the transfer of ownership in a tax-efficient way, while also saving on future estate taxes."
An analysis by Fidelity Investments has found that average 401(k) balances rose 2.4% to record high of $106,500 in the third quarter from the previous quarter, according to this article on CNBC. Average balances for IRAs and 403(b) also increased to $111,000 and $85,500, respectively, during the same period. "Now, more than ever, we're seeing increases in engagement when it comes to saving and investing for retirement," says an expert with Fidelity.
Target-date funds can be great investment options for 401(k) participants, particularly those who are just starting and have very little assets in their accounts, according to this article on MarketWatch. However, workers should not just focus on TDFs and consider other investments over time. “These funds treat everyone as if they have the same risk tolerance and income needs in retirement, and can tolerate the volatility before the ‘target’ year is reached,” says an expert.
Clients who want to boost their retirement savings next year should take advantage of the increase in contribution limits to their 401(k)s and IRAs, according to this article on personal finance website Motley Fool. 401(k) participants can contribute as much as $19,000 ($25,000 for those aged 50 and older) in 2019, while IRA investors can increase their contributions to $6,000 ($7,000 for those aged 50 and above). Socking away money in health savings account is also another great way to boost savings, as this account offers tax deductions and tax-free distributions for qualified medical expenses in retirement.
