retirement | Common News Update

Apr62021 by adminNo Comments

Here’s guidance for handling taxes on Covid-related withdrawals from retirement accounts

Finance

MoMo Productions | DigitalVision | Getty ImagesThat early withdrawal from your retirement account last year may have been a life saver. Now, it's time to start paying the taxman.Most retirement savers did not take a distribution under legislation that authorized penalty-free early withdrawals amid the pandemic.However, for those who did, the majority (69%) say they either don't plan to replace any of the money they withdrew or are unable to do so, according to recent research from Principal Financial Group. Another 18% intend to repay part of their withdrawal, and 13% say they'll replace the full amount.Be aware that you're required to include at least a portion of any taxes owed on your 2020 return — which is due May 17. And depending on the tax form you received, extra steps may be requi...

Mar102021 by adminNo Comments

That raise you got might complicate saving for retirement, but advisors have workarounds

Finance

Supoj Buranaprapapong | Getty ImagesIt's always nice getting a raise, but it could affect your ability to save for retirement through your 401(k) plan.Highly compensated employees — those making more than $ 130,000 annually — may not be able to contribute the maximum to their tax-deferred retirement plan if their lower-paid colleagues aren't diligently socking funds away, too.The 2020 and 2021 limits for deductible contributions to a 401(k) plan are $ 19,500, or $ 26,000 including a $ 6,500 optional catch-up contribution for people over age 50.Highly compensated employees, however, may not be able to contribute those maximum amounts. HCEs are defined as anyone who makes more than the $ 130,000 income threshold or who — along with their spouse and/or family members — owns more than 5% ...

Feb152021 by adminNo Comments

Why the 401(k) won’t fix the U.S. retirement crisis

Finance

Kyla Ernst-Alper is an aerialist in New York City. She's never had an employer that offered her a 401(k) retirement plan in more than two decades of performing.Giles ClementKyla Ernst-Alper, a 38-year-old aerial performer in New York City, has never had a 401(k) retirement plan.She holds multiple jobs at once to support herself, and none of them offer her any retirement options. She socks away what she can in an individual retirement account, but those savings are not always consistent. That's due to her line of work, which was especially hard hit when live shows were canceled because of the public health crisis."Before the pandemic, people in my community were barely paying their bills," Ernst-Alper said. "You're lucky if you're able to save money."The 401(k) is framed today as the main w...

Jan242021 by adminNo Comments

Here are tax issues to consider if you tapped retirement account to weather 2020

Finance

fstop123 | E+ | Getty ImagesIf you pulled money from your 401(k) plan or individual retirement account last year to get through tough times, now is the time to consider next steps.The federal CARES Act that was passed in March 2020 put in place very favorable terms for qualified retirement plan participants under the age of 59½ to tap their nest eggs without incurring the usual 10 percent penalty. Plan participants could withdraw up to $ 100,000 from their accounts and recognize it in income over a three-year period for tax purposes. They were also given three years to replace the withdrawn money to the account without any penalties or taxes owed."My first advice is don't withdraw money from your retirement plan," said Mark Luscombe, principal federal tax analyst for Wolters Kluwer Tax &a...

Dec252020 by adminNo Comments

Retirement savings on track? How to make sure you’re prepared for other goals, too

Finance

nd3000 | iStock | Getty ImagesStart young. Look away from your 401(k) when the market freaks out. Don't sell.A lot of the investment advice you hear probably has to do with saving for retirement. Yet many people need to use the market's returns to achieve other goals, too.Often it also makes sense to invest for objectives like a down payment on a house, starting a business or sending a child to college, among other milestones that can arise long before you go gray or consider leaving work for good."Life is so much more than retirement," said certified financial planner Peter Creedon, CEO of Crystal Brook Advisors in Mount Sinai, New York.It can be intimidating and confusing to juggle multiple goals with different timelines. CNBC spoke with financial advisors about how to best do so.First, ...