A 702(j) retirement plan really isn’t a “retirement plan” at all. It’s a cash value life insurance policy sold as a retirement plan. You may have heard the spiel. The promise of a 702(j) plan is tax-free retirement income. It is possible to access the cash value in a life insurance policy tax-free, but there …
If you hold a portfolio that contains stocks or equity funds, whether they are mutual funds or ETFs, then chances are you receive dividends. You probably reinvest at least a portion of them. But are reinvested dividends taxable? Reinvested dividends are generally taxable like any other dividend but that doesn’t necessarily mean you’ll incur a …
The idea for this article comes from a question submitted by a reader. I’ve copied the question below, and omitted the names to protect the innocent. (No animals were harmed in the creation of this article.) The question: Let me start by saying, I totally enjoy reading your articles/post! Do you have any information on …
One of the easiest ways to increase your retirement income is to reduce your tax bill on that income. With tax-free municipal bonds you can reduce that tax bill to zero and enjoy tax-free retirement income. If you loan money to state and local governments by purchasing municipal bonds, the interest you receive is normally …
Social Security is a significant portion of most retirees total income. In fact, about a third of retirees get 90% of their income from Social Security. Such an important component of your income deserves some attention. In this article you will learn how your benefit is calculated so that you can get an idea of …
One withdrawal strategy that you could use for your retirement income is to withdraw a fixed percentage of your portfolio each year. Because of its simplicity this approach may be appealing to you. It is also very easy to implement.
What are the risks of relying on dividends for retirement income? Like most things used in moderation there isn’t anything wrong with dividends, or the stocks that pay them. In fact, higher-dividend paying stocks are usually older, established, and strong companies. They can be good components of retirement income plans and help provide some diversification …
If you withdraw money from your tax-deferred IRA or 401k accounts before you turn 59.5 you will owe a 10% penalty in addition to income tax. A 72(t) distribution is a way of accessing the money in your retirement account before you turn 59.5 without incurring the penalty. No doubt, you are aware that withdrawing …
One of the key considerations in a retirement income plan is the amount of money that you will withdraw from an investment portfolio. Your decision regarding how much income to take from your retirement account necessitates that you strike a balance between current consumption and future account value. In simple language, this means that you …
Roth IRA’s are one of the most popular retirement accounts. Roth IRAs have many advantages over tax-deferred accounts, namely the ability to provide tax-free growth. The ability to provide tax-free growth is premised on making contributions with after-tax dollars. As I’m sure you are well aware, you must pay taxes on essentially each dollar you …
Retirement planning is a comprehensive issue. What I mean by this is that there are a number of sub-components of retirement planning that are pretty distinct from each other. Consider the two broad phases of retirement planning. First is the accumulation phase when the investor sets aside assets as they are earned in order to …
If you save for retirement using tax-deferred accounts then you need to understand the rules surrounding required minimum distributions (RMDs) in order to avoid some pretty steep penalties. For some retirees, the required minimum distribution is less than they would withdraw anyway, and is therefore not much of a planning concern. For others who intend …
