Senate bill could scrap this IRA strategy

Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about.

Pending Senate bill could scrap this IRA strategy
A bill now pending in the Senate includes provisions that would scrap an IRA strategy that helps non-spouse beneficiaries save on taxes by spreading distributions from inherited accounts, according to a Fox Business article. Under the bill, non-spouse heirs would be required to drain the assets within 10 years after the owner’s death. An expert urges clients leaving money to reconsider their plans, warning they could be “be making the IRS your biggest beneficiary.”

Many tax deductions are likely to disappear once Congress passes the tax reform bill into law.

A bill pending in the Senate could scrap an IRA strategy that helps non-spouse beneficiaries save on taxes by spreading distributions from inherited accounts.

Bloomberg News

Are clients sabotaging their own retirement plans?
Just having a retirement account doesn’t cut it these days. Clients could in fact be putting their golden years at risk if they have not developed a real retirement plan, according to an article by Motley Fool. Their retirement plans could also be in jeopardy if they pay too much in investment fees in their 401(k) and other accounts. Taking early withdrawals is also a bad move, as the withdrawn amount could be subject to 10% penalty plus income tax.

4 strategies to increase Social Security benefits
Clients looking to maximize their Social Security benefits should work for at least 35 years and negotiate with their employer for bigger pay, according to an article by USA Today. Most seniors need somewhere in the ballpark of 70% to 80% of their former earnings to live comfortably. To get there, clients may want to consider delaying taking social security benefits and moving to a location with no state tax on the benefits. This would allow seniors to collect bigger benefit payouts.

How a Roth IRA could maximize clients’ future benefits
Converting some assets in traditional 401(k)s and traditional IRAs into a Roth account is a great strategy to minimize required minimum distributions from traditional retirement accounts, according to Kiplinger. Experts say reducing RMDs will help retirees minimize taxable income and reduce the tax bite on Social Security benefits. Plus, now is a good time to get started due to low tax rates set by the 2017 tax law change.


Paola Peralta


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