Effective Retirement Planning Includes Contingencies

August 13, 2018
Retirement Planning

We’ve been hearing for years that Americans don’t save enough for retirement. Research indicates that many are unaware of the true cost of living during retirement.

Roughly one in five Americans in the workforce believe that “working for pay” will be a major source of their retirement income. This is according to the “2018 Retirement Confidence Survey produced by the Employee Benefit Research Institute (EBRI). Nearly half of respondents believe paid work will be a minor source of retirement income for them. Read more

SEPs: A Quick and Easy Retirement Plan Option

December 27, 2017
Simplified Employee Pension

Setting up a simplified employee pension (SEP) is easier than you think, but they do come with advantages and disadvantages.

Setting up and maintaining a simplified employee pension (SEP) is probably easier than you think. The sooner you get started saving, the more secure your retirement will be, plus your business can gain tax advantages right away.  Read more

Avoid Common Pitfalls of Retirement Plan Compliance

December 13, 2017

Retirement Plan ComplianceJust as having an outside expert prepare your company’s tax return doesn’t get you off the hook if you have problems with your financial systems, using professional retirement plan administrators and investment advisors doesn’t absolve you of responsibility for complying with IRS regulations.

Where problems typically crop up, according to Monika Templeman, IRS Director of Employee Plan Examinations, is when “there’s a communication gap between you and the plan administrator about what the plan document provides and what documentation is needed to ensure compliance.” The following are the most common communications breakdown-related mistakes her department uncovers in audits, as described on an IRS webpage on the importance of internal control systems: Read more

Defaulting on Retirement Plan Loans Causes Taxable Distributions

November 20, 2017
Retirement Plan Loans

Not repaying retirement plan loans can lead to major tax consequences.

Want to borrow money from your retirement plan? Not so fast. Retirement plan loans can be a viable way to get money in a crunch, but you need to follow the rules about repaying them. If you don’t, it could lead to unfavorable tax consequences, as two taxpayers recently learned the hard way in U.S. Tax Court. Read more

Report Warns Retirees about Potential Downsides of Reverse Mortgages

September 18, 2017
Reverse Mortgages

The IRS is warning senior citizens against taking out reverse mortgages.

Reverse mortgages have been around for years. But they’re getting a new spin: Some senior homeowners are tapping into their home equity to “bridge the gap” until the time they’re ready to apply for Social Security benefits.

However, an independent consumer agency — the Consumer Financial Protection Bureau (CFPB) — is cautioning retirees against using this strategy. A recent CFPB report claims that the costs and risks associated with a reverse mortgage often exceed the cumulative increase in Social Security benefits you would receive by delaying benefits.  Read more

U.S. Treasury to Retire the myRA Program

August 24, 2017
myRA program

The IRS is set to retire the myRA program.

Created just a few years ago in 2014, the My Retirement Account (myRA) program will end, according to the U.S. Department of the Treasury. As part of the Trump Administration’s effort to slim down wasteful spending where possible, the Treasury has decided this short-lived Roth IRA backed by the government isn’t cost effective.

First Some Background on Roth IRAs

A Roth IRA is an individual retirement account that’s treated as a traditional IRA except where special rules apply. For 2017, individuals can make annual, nondeductible Roth IRA contributions up to $5,500, or $6,500 for those age 50 and older (or 100% of compensation if less). The total contributions for the tax year must be reduced by amounts that are put into all other IRAs. Read more

Understand Your Social Security Retirement Benefits

August 3, 2017
Social Security Retirement

Understand your Social Security Retirement Benefits

For years, people have questioned the viability of the Social Security system going forward. In July, the Social Security Board of Trustees released its annual report on the long-term financial status of the Social Security Trust Funds.

The report projects that the combined asset reserves of the Old-Age, Survivors and Disability Insurance (OASDI) Trust Funds will become depleted in 2034, unless Congress takes action to reverse the situation.

In general, people approaching retirement age often have other questions about benefits they may be eligible to receive from the Social Security Administration (SSA). Here are common concerns regarding the Social Security system.

Read more