Retirement
A nursing home cannot directly seize funds held in an individual retirement account (IRA). However, retirement accounts in many states are generally treated as countable assets for Medicaid eligibility, which means their value can affect whether you qualify for Medicaid coverage of long-term care. In many cases, this requires a…
Reaching your 80s doesn’t automatically mean saying goodbye to income taxes. Many retirees live on fixed incomes and may owe little or nothing to the IRS. However, others with pensions, investment income or retirement withdrawals may still face tax obligations. The key to understanding your tax situation in your later…
How Roth IRA gains are taxed depends on when and why you withdraw the money. You can typically withdraw growth inside a Roth IRA completely tax-free if you meet certain IRS rules. However, early withdrawals or non-qualified distributions may trigger income tax and even penalties. It can be extremely beneficial…
For most of your working career, the focus of your retirement planning is on accumulating savings and investing that money wisely. As you approach retirement, more attention will go to estimating your income after you stop working, and the kind of lifestyle that this will support. The way to do…
A retirement budget compares expected income with planned expenses to see whether spending fits within available income. This process begins by listing income sources and savings and estimating how much they can provide each year. To show how a retirement budget works, let’s break down an example of a retirement…
A Roth IRA offers tax-free growth and tax-free withdrawals in retirement, which can benefit young adults with long time horizons. You can help open a Roth IRA for an adult child if they have earned income and the account is in their name. Starting early allows more time for growth.…
Roth IRAs allow your savings to grow tax free and allow tax free withdrawals in retirement. Your income determines whether you can contribute and how much you can add. The IRS sets annual income limits based on your tax filing status. These limits decide whether you can make a full…
You can use money from a health savings account (HSA) to pay for COBRA health insurance, allowing you to cover premiums with tax-free withdrawals. COBRA premiums qualify as medical expenses under HSA rules, which can make an HSA useful for maintaining coverage after leaving a job. Before using these funds,…
A Roth IRA conversion is available any time you have money in a qualifying pre-tax account. People choose to make a conversion to reduce future required minimum distributions (RMDs), spread taxes over several years and create a source of tax-free retirement income. But the success of this strategy will depend…
If you default on a 401(k) loan, the balance is usually treated as a taxable distribution. This may result in income taxes and, if you are under 59½, a 10% early withdrawal penalty. It can also reduce the amount you have available for retirement in the future. A financial advisor…
