Retirement Watch Weekly
How to Avoid the 3.8% Tax on Investment Income
The NIIT is the least-known of the Stealth Taxes and the one most likely to surprise retirees.The net investment income tax (NIIT) was created in the Affordable Care Act. It was labeled a Medicare surtax, but the proceeds go into general revenues not the Medicare trust fund. The NIIT is a 3.8% tax on the […]
Year-End Planning for 2020: A Special Year
A unique year is drawing to a close, and it requires unique year-end tax planning. Taxes are likely to increase soon. The only issues are when they’ll increase and who will bear most of the increases. The 2017 tax cuts are set to expire after 2025. Federal debt continues to climb. The Social Security trust […]
Should a Living Trust Be Beneficiary of Your IRA?
There are only a few instances your heirs aren’t penalized when you name a trust as the beneficiary of your IRA. A recent IRS ruling gives an example, but the ruling also reveals the pitfalls of the strategy. The general rule is when an IRA beneficiary is not an individual, the IRA must be distributed […]
How to Decide Whether to Convert an IRA and How Much to Convert
The Roth IRA is one of the most powerful tax and retirement planning tools available, yet it is misunderstood and often misused.The investment income in a Roth IRA compounds tax free, and most Roth IRA distributions are tax free. In addition, there are no required mini-mum distributions (RMDs) during the original owner’s life. Distributions also […]
Estate, Gift and Income Tax Amounts Increased for 2021
The IRS announced the annual inflation increases for various tax provisions, effective as of January 1, 2021.The lifetime estate and gift tax exemption increased to $11.7 million from $11.58 million. A couple can jointly exclude $23.4 million. The annual gift tax exclusion remains $15,000 for 2021. The standard deduction for married couples filing jointly is […]
Estate Planning for IRAs After the Secure Act
Estate plans for taxpayers with substantial individual retirement accounts (IRAs) were upended by the Setting Every Community Up for Retirement Enhancement (SECURE) Act, enacted in December 2019. The key provision of the SECURE Act ended the Stretch IRA. In a Stretch IRA, the beneficiary maximized the IRA’s tax deferred com-pounding of income and gains by […]
Bob’s Journal for 11/25/20
Happy Thanksgiving in This Unique, Eventful Year of 2020 Happy Thanksgiving in this unique, eventful year. I’m preparing this week’s Bob’s Journal early so you receive it before the holiday. I’m dispensing with the regular format to let you know that my wife, Elaine, and I thank you for the opportunity to help you establish […]
Retirement Savings Tip: Stop Spending Too Much on Prescription Drugs!
In last week’s issue of Retirement Watch Weekly, I presented What You Need to Know About the Prescription Coverage Gap. We’ll continue on that track this week, with the best ways to save money on your prescription drugs. Prescription drugs are a major spending item for many retirees, and the cost of prescription drugs is […]
