Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about
With the stretch IRA strategy no longer available to non-spouse beneficiaries, advisors can help mitigate the tax impact on their heirs by converting regular IRA assets into a Roth, writes an expert in CNBC. They should consider doing the conversion in the years they move to a lower tax bracket, as the converted amount will be subject to federal taxation, he writes. "A Roth conversion might be a good option, not only to minimize heirs’ tax burden but also to sustain the growth of your retirement savings."
A non-qualified deferred compensation plan is an option for employers to provide post-retirement payments to their workers in a tax-effective manner, says an attorney in this Forbes article. A non-qualified deferred compensation plan is given upon retirement or other employment termination and is different from a conventional qualified retirement plan, he says. For example, "the employer and the beneficiary are taxed on deferred compensation benefits when these are promised, not when payments are actually received."
The rising cost of health care should prompt clients to consider making an HSA a part of their retirement plan, according to this Motley Fool article. Compared with the 401(k) and other retirement savings plans, an HSA offers greater tax benefits, according to the article. Contributions are made on a pretax basis, the savings grow tax-free and clients will owe no income taxes on withdrawals used for qualified medical expenses.
Although roughly 40% of the actively managed industry beat their indexes, the worst-performers eked out an average gain of just 1.07%.
Taxpayers should ensure that they meet the deadlines set by the IRS to avoid hefty penalties, according to this Fox Business article. Clients who owe the IRS should make the payment by April 15, while those who need to make estimated tax payments should settle the bill on time. Retirees who turned 70 1/2 last year have until April 1 to take the first required minimum distribution from their traditional 401(k)s and IRAs, and have to take another RMD withdrawal by Dec. 31, according to the article.
