By Paul Premack Published 5:34 pm CDT, Friday, August 17, 2018 Dear Mr. Premack: My mother-in-law died (90 years old) and left a traditional IRA to her estate. She did not name beneficiaries, she has four sons, but checked the estate box. I keep getting conflicting answers, is the estate taxed on income or are the beneficiaries of the will (4 brothers) taxed on the income when they receive their portion? Where does the tax burden reside? Someone else said that the estate can file income taxes and pay the taxes over 5 years. I appreciate the clarification. – B.S. An IRA (individual retirement account) is a tax-deferred savings program used by millions of Americans to help fund their retirements. IRAs are great tax and retirement tools, and they need to be integrated into each person’s estate planning. Universally, when an IRA is established and funded, the owner also designates specific individuals to receive the funds in case of death. At age 59 ½ the … [Read more...] about IRA should have designated beneficiary for best tax result
Traditional ira income limits
By Dayana Yochim/NerdWallet The average household led by a retiree makes $48,000 annually before taxes and spends roughly $46,000 a year. That's according to the Bureau of Labor Statistics' (BLS) measure of the income and outflow of "older households," meaning ones headed by someone 65 or older. Meanwhile, the annual average pretax income for all U.S. households is about $74,000 and expenditures are $57,000. While the main source of money for those still toiling in the 9-to-5 world is, of course, wages from work, who signs the average retiree's $4,000-a-month paychecks? Here's the answer to the $48,000 question. Retirees' trillion-dollar allowance By far the biggest source of income for retired Americans is Social Security, which in 2018 will pay out about $1 trillion in benefits, according to data from the Social Security Administration. As of May, the average monthly Social Security benefit for retired workers was $1,412, or just shy of $17,000 a year. (Remember, this is per … [Read more...] about Could you get by on the average American’s retirement income?
IRAs are a great way to save for retirement, because they give you a tax break for doing so. It’s basically a reward for looking after your future self. But how do you maximize the benefits of an IRA? Here’s how much and how often to contribute to your IRA. How much should I contribute? In a perfect world, the answer is, as much as possible, up to the $5,500 annual maximum ($6,500 if you’re 50 or older). However, the real world isn’t usually that simple. You may have a limited amount of money, and you may have a retirement plan at work. The good news? IRAs can complement workplace plans such as 401(k)s, or fill in for them if your employer doesn’t offer one. Here’s one way to think about divvying up your money: Contribute enough to your 401(k) or other workplace retirement plan to get the full company match. That’s free money, sometimes dollar for dollar up to a specific percentage of your pay. You don’t want to forfeit … [Read more...] about How much should I contribute to an IRA
WASHINGTON — There are many financial decisions that a widow has to face in the early days after the loss of a spouse. One of them is deciding how to handle the assets that come to you from traditional individual retirement accounts (IRAs) that were owned by your spouse. The rules can be complicated, and making an uninformed decision may result in having less of the money that was left to you to support yourself and your family. While we suggest that you consult with both tax and financial advisers to help you make the best decision, here are a few things to know. There are four main options a widowed spouse can take when it comes to inheriting traditional IRA assets as a direct beneficiary (i.e., not through a trust). Those options are: Roll over assets into an IRA in your name Roll over the assets into an inherited IRA account Take the assets out for spending Convert the assets to a Roth IRA A fifth option, disclaiming all or part of the assets, may apply if you think … [Read more...] about 5 facts widows need to know about inheriting traditional IRAs
You may be a couple of years away from claiming Medicare , but it's not too early to plan how you can adjust your income today to prevent higher Medicare premiums later. The government yearly sets income limits for standard Medicare premiums, and if you exceed the amount, you will pay a surcharge. The surcharge is based on your tax return from two years prior, so avoiding the surcharge requires advance planning. Those enrolling in Medicare at 65 need to start reviewing their tax situation through the lens of Medicare surcharges at age 63, if not sooner. There are four Medicare surcharge tiers. Once income rises above $85,000 for singles and $170,000 for joint filers this year, Part B and Part D costs begin a steep climb. For example, the standard monthly Part B premium of $134 per beneficiary jumps to $187.50, plus a $13 surcharge for Part D, for singles with modified adjusted gross income between $85,001 and $107,000. The income range for joint filers is $170,001 to $214,000. At the … [Read more...] about Retirement: Planning ahead to avoid higher Medicare premiums