If you are age 72 or older, you generally must take required minimum distributions (RMDs) from your traditional IRA or employer-sponsored retirement plan, such as a 401(k) or 403(b), each year. These amounts are included in your taxable income, and if you fail to take your RMD by the annual deadline, the amount not withdrawn
When deciding how to invest your money in order to maximize returns and minimize taxes over time, you may hear about two different strategies: active and passive investing. As the names suggest, active investing involves a more hands-on role for the portfolio manager, while a passive approach involves buying and holding investments for the long-term.
There are many reasons why you might want to move your retirement savings to another account. Maybe you want to invest with a company with better performance. Maybe you changed jobs and want to bring past accumulations with you to a new plan. If you’re among the millions who lost a job as the economy
Converting a traditional Individual Retirement Account to a Roth IRA offers tax advantages in certain situations. It is most advantageous when you can pay any resulting income taxes without using funds from the traditional IRA. Contributions to Roth IRAs have already been taxed, so they grow tax-free. That means withdrawing from a Roth IRA after
You’ve been saving aggressively in an IRA or 401(k) plan for your whole career and you’re set up well for retirement. Or are you? If you’ve built up a large nest egg only or mostly in tax-deferred accounts, you may give up too much of your hard-earned savings to taxes when you begin withdrawing from
For traditional IRA owners aged 70.5 or older, making qualified charitable distributions (QCDs) from their accounts offers a way to donate to a charity of their choice while reducing taxable income. However, among its many other changes to retirement plans, the Setting Every Community Up for Retirement Enhancement (SECURE) Act included provisions that have made
Saving for retirement in a traditional Individual Retirement Account effectively shelters income from taxes while you’re in your high-earning years. But a Roth IRA, which allows withdrawals tax free in retirement when tax rates may be higher, is also appealing. If you haven’t balanced your investments in both types of accounts—or if you couldn’t start
Taking distributions from your retirement account will not reduce your Social Security benefits. However, these distributions will add to your income, which will affect the taxes you pay and could cause your Medicare premiums to rise. Added to any wages and other income sources, distributions from traditional individual retirement accounts and 401(k)s are taxable and
As two of the most widely used vehicles for retirement savings, traditional IRAs and Roth IRAs are both designed to facilitate long-term investment and provide tax advantages. However, one of the key differences between them lies in when they are taxed. Traditional IRAs are funded with pre-tax dollars: you receive a tax deduction when you
Most investors are familiar with the idea of allocating investments across different asset classes to diversify portfolios and manage risk. It’s also important to balance savings across a mix of taxable, tax-deferred and tax-exempt accounts. Why? Simply put, investing for tax efficiency lets you keep more of your money. The first rule of investing is