A report from the Government Accountability Office warns that workers and retirees can see a reduction in their retirement benefits if the government does not reform the Pension Benefit Guaranty Corporation, according to this article on Forbes. The PBGC is dealing with a $54 billion deficit for insuring multiemployer plans in unionized industries, says the GAO report, adding that single employer plan insurance could also face a similar fate. “While the PBGC's single-employer program currently is in (a $2.4 billion) surplus, it is not certain that the program will remain in surplus into the future.”
Retirees who donated their required minimum distribution to charity directly from their IRAs through a qualified charitable distribution are advised to notify their tax preparer about the donation so that the amount will be excluded from their taxable income, according to this article on Kiplinger. The 1099-R Form reflects the total amount of the distribution without indicating the QCD portion, and the tax preparer might consider the entire distribution to be taxable income. “Filers who aren’t on their toes may make a mistake here and overpay their taxes by failing to reduce the taxable amount of IRA withdrawals by the amount of the charitable gift,” says a certified financial planner.
Millennials will be better off getting invested in the stock market than keeping liquid assets, writes an expert on MarketWatch. That’s because those who consider that cash is king will miss out on the generous returns that the equities market can provide them over the long term, explains the expert. “Most people in the 18-to-37 age group have at least 40 years of investment performance ahead of them. Instead of looking at the money people lost in one or two years a decade ago, they should focus on what is likely to happen over a 40-year period.”
A study by J.P. Morgan Asset Management has found that the amount of money that seniors will spend in retirement could affect the quality of life they live, according to this article on CNBC. Retirees should not always rely on the traditional retirement rules, including the 4% withdrawal rule, as their needs could change drastically, the study found. To plan effectively for retirement, clients should anticipate their income needs to increase during the early years of retirement, especially when they face emergency expenses.
