If you’ve already maxed out your 401(k) and other tax-deferred accounts, the next question is usually where to put the rest. For a lot of high earners, the answer they skip over is the Roth IRA — skipped because they assume they earn too much to use one. On paper, they’re right. But there’s a…
Taxes are on sale. It just does not feel like it. Taxes are on sale, although few people would describe them that way. Measured against the last eighty years, the federal income tax rates most Americans pay are close to the lowest on record. Most households would nonetheless swear they are paying more than ever,…
Once a year, the IRS tells retirees with traditional IRAs and 401(k)s the smallest amount they must withdraw. A surprising number of them hear it as the largest amount they are allowed to spend. Unfortunately, some do not hear anything. A recent Vanguard survey of retirement account holders found that 44 percent of those who…
Rule of 55 and 72(t) Retirement Income Planning The Rule of 55 and IRS Rule 72(t) SEPP: Two Paths to Penalty-Free Early Withdrawals Many people approach retirement — or early retirement — with the mistaken belief that age 59½ stands as an impassable gate between them and their tax-advantaged accounts. Touch that money before the…
Few decisions a military retiree will ever make carry the permanence of the Survivor Benefit Plan election. It is made once, at retirement, and with narrow exceptions it cannot be undone. The premium is paid for life. The coverage either exists or it does not. And the financial consequences — for the surviving spouse, for…
Social Security is an annuity. Claiming it is the decision most people make by accident. Strip away the politics and the paperwork, and Social Security is a simple thing wearing a complicated costume. It is a lifetime annuity. You pay in during your working years, and in return you get a monthly check that keeps…