Relaxed rules for small businesses’ retirement plans
Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about.
The Labor Department has issued the final rule relaxing the rules for small businesses to establish multi-employer retirement plans for their workers, according to this article in The Wall Street Journal. The rule will take effect Sept. 30. Under the regulation, firms in different industries will be allowed to establish a joint retirement plan provided they operate in the same state or metropolitan area, while similar companies operating in different regions can also band together and create a retirement plan for their workers.
Seniors should be careful to moderate their spending to avoid risking the security of their retirement plans or outlive their savings, according to this article in Motley Fool. Developing a sustainable withdrawal strategy or plan is recommended so retirees don’t draw more money than they should from portfolios. Seniors should also determine how taxes will affect their retirement distributions.
There are a number of key factors that seniors should understand before launching a business in retirement, according to this article in Yahoo Finance. For example, they should not use their entire savings to fund the endeavor, they should know that hiring workers could make the business more complicated and they should build in an exit plan. Seniors should also understand the tax consequences of running a business, as tax laws can differ by location and the type of business.
Clients should ensure they save for the cost of health care, as it will be one of their biggest expenses in retirement, according to this Nasdaq article. They should also save for housing expenses. Taxes are another considerable expense, but there are ways to mitigate the impact of taxes on retirement income. For example, clients are unlikely to owe income taxes if they depend solely on Social Security in retirement and they can boost their tax-free income by contributing to a Roth IRA.