Tax Warrior Chronicles

GUEST BLOG - Are Most of Your Retirement Eggs in the Same Tax Basket?

Posted on Wed, Feb 12, 2020

By: Jeremy Gussick, MBA, CFP

 

As the busy tax season gets into swing, we like to tap friends in the financial planning world to help our clients and subscribers with their planning. Jeremy Gussick of LPL Financial is no stranger to our subscribers.  Today, he talks about taking distributions from various types of retirement accounts in the most tax-efficient manner.

 

Did you know that the vast majority of assets currently saved for retirement in this country are all in the same tax-structured account type?  And by saving in this fashion, you may be placing some significant limitations on your ability to grow and distribute your assets during retirement in the most tax-efficient manner? 

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The SECURE Act - Significant Changes for IRAs and 401(k)s – Part II

Posted on Fri, Jan 03, 2020

By: Beth Gaasbeck, CPA, MBA and Robert N. Polans, CPA, MT, PFS

 

Welcome to Part II of our two-part blog discussing the SECURE Act and its impact on retirement and estate planning.  The Act was signed by the President on December 20, 2019, and is effective as of January 1, 2020. Today’s focus is on the not-so-good parts of the Act.

 

In Part I, we summarized notable provisions of the Act, focusing on the increase in the Required Minimum Distribution (RMD) age and the removal of age restrictions for making IRA contributions (the good news).  Today we’ll discuss the changes to the RMD rules for inherited retirement plans and the elimination of the “Stretch IRA” (the bad news). Let’s start by

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The SECURE Act - Significant Changes for IRAs and 401(k)s – Part I

Posted on Thu, Jan 02, 2020

By: Beth Gaasbeck, CPA, MBA and Robert N. Polans, CPA, MT, PFS

 

On December 20, 2019, President Trump signed the Setting Every Community Up for Retirement Enhancement Act (the SECURE Act) as part of the Further Consolidated Appropriations Act, 2020, effective 1/1/2020.  Not exactly a Holiday present, there are favorable and unfavorable provisions impacting your retirement planning.  In this two-part series, we will take a closer look at the highlights under the  law.

 

Several notable provisions include:

  • Increase in the age to take required minimum distributions from 70 ½ to 72
  • Removal of age restrictions for making IRA contributions
  • Shortened timeline for taking post-death required
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IRS Issues Final Regulations on 401(k) Plan Hardship Distributions

Posted on Thu, Oct 31, 2019

By: Sherri Sorbello, CPA

 

The IRS issued final regulations on September 23, 2019, for hardship distributions from 401(k) plans. The final regulations are effective for distributions made on or after January 1, 2020, or the rules can electively be adopted for distributions made after December 31, 2018.

 

For a bit of background, 401(k) plans may include a provision that a plan participant can receive a distribution from the plan due to hardship. The participant must have an immediate and heavy financial need.  There is a safe harbor listing of expenses provided by the IRS for which distributions are deemed made due to immediate and heavy financial need.  These specified expenses include

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Top 5 Blogs of the 2019 Tax Season

Posted on Mon, Oct 28, 2019

By: Eric R. Elmore

 

The 2019 tax filing season has finally concluded, and not a moment too soon.  Americans filed the first full year of income under the Tax Cuts and Jobs Act of 2017 (“TCJA”), the most sweeping revamp of the tax code in more than 30 years. Today’s post is a snapshot of the blogs that were most read by our subscribers over the course of the filing season. It’s a good indication of what was on the minds of our readers while filing their returns. Did any of these play out in your tax planning?

 

Most outside the world of accounting and finance don’t know there are two “tax seasons” per year. The spring deadlines are well known, these deadlines get all the press.  The fall

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Retirement Planning Late in the Game

Posted on Thu, Sep 26, 2019

By: Matthew Walker, CPA

 

Every day you put off funding your retirement is another day your nest egg could be growing. Starting late may seem like a tall task, but it is still possible to set aside enough for a comfortable retirement if you begin the process now, rather than later. It is first imperative that you develop a plan, set goals and begin action. The longer you wait, the harder it will be to catch up. Here are some tips to help…

 

How much do I need to retire?

It is impossible to plan for the future unless you have a clear picture of your current financial position.  You should start by preparing a list with all your assets and liabilities, as well as a list of your sources of

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Talking Taxes with Kids – 529 Plans, IRAs and 401(k)s

Posted on Thu, Aug 15, 2019

By: Stacie L. Court, CPA, MST

 

There are many benefits to contributing early to education plans, IRAs, and 401k’s – the largest benefit being the advantage of time to compound funds in tax-advantaged accounts.   Children have many years to grow the earnings in these funds, but how do you talk to your kids about the complex world of investing in these types of funds and encourage them to start early? 

 

Let’s begin by discussing these different types of plans:   

 

Section 529 Plans

A 529 plan is a tax-advantaged savings plan used to make it easier to save money for college, post-secondary training and tuition for elementary or secondary schools. 

 

Originally, 529 plans were designed to

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Understanding Self-Directed IRAs … Is One Right for You?

Posted on Thu, Dec 07, 2017

By: Svetlana Goldina, CPA

 

A Self-directed Individual Retirement Account ("SDIRA"), while like traditional IRAs and 401Ks, is an alternative approach to retirement investing, which allows the account owner greater control to choose a much broader range of investment options. In today’s post, we’ll help you understand them better so you can decide if one is right for you.

 

A major advantage of SDIRAs over traditional retirement accounts is SDIRAs give you the ability to invest in non-traditional assets such as rental real estate, mortgage loans, precious metals, foreign currency, business start-ups, and more. This provides an opportunity for SDIRA owners to use their expertise and

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Exceptions to Early Withdrawal Penalty for 401(k) & IRA Distributions

Posted on Thu, Nov 30, 2017

By: Sherri Sorbello, CPA

 

Most distributions from 401(k) plans and IRAs are subject to a 10% early withdrawal penalty if they are taken before you reach age 59 ½.  However, like most tax rules, there are certain exceptions allowing you to withdraw funds without a penalty.  This blog will address the most common exceptions to the 10% additional tax on early withdrawals. 

 

Deferring money to retirement savings plans offered by employers is a great way for Americans to save for their golden years.  And, though in this blog we outline reasons the early withdrawal penalties are waived, we recommend this as a last resort. Talk to your tax and financial advisors before withdrawing any funds.

 

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“Stressed” Retirement System Forces GAO to Review 401(k) Contribution Deductions

Posted on Thu, Oct 26, 2017

By: Eric R. Elmore

 

While Congress waivers on whether to reduce retirement savings deductions, all pillars of our retirement system appear to be under stress. A recent Government Accountability Office (GAO) Report highlights the challenges faced by each component of the U.S. "retirement system" and argues the case for a fundamental re-evaluation to better promote future retirement security. And, though the Republican-led Congress rarely follows the GAO’s lead, if you have a 401(k), you should be paying attention to what it is saying.

 

The GAO says fundamental changes have occurred over the past 40 years to the nation's retirement system, which comprises three main pillars: Social

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