For this third edition in the series of articles, entitled "The Tax Man Cometh", I have focused on the importance of making proper choices and considering various strategies as you approach the mandatory retirement distribution age of 70 ½.
Ideas to consider focus on continuing the benefit of deferring distributions and therefore, taxes, on this income. It is actually the age of 69 ½ that affords a number of these tactics which include, for those still working:
1) the final year of contribution to a traditional IRA plan.
2) Possibly rolling IRA investments into your qualified retirement plan at work so that you may continue to defer distributions, assuming the plan allows, beyond age 70 ½.
3) Converting IRA assets to Roth IRA assets which have no minimum distribution requirements.
4) Investing in a Qualified Longevity Annuity Contract which the Treasury Department released final regulations on in July of 2014. The rules are somewhat complex but these vehicles allow distributions to be delayed until age 85.*
Although the majority of us may need to rely on income from our retirement plans at or before age 70 ½ for those that may be lucky enough to have a great source of income from pensions, personal savings and investments, having additional required income beyond what is needed to support your lifestyle may be adding unnecessary taxation.
I hope this article is beneficial to many of you and you will continue to take interest in my additional segments to follow.
Want to read more? Click here.
We hope you find this article helpful and stay tuned to our next installment of "Tax Man Cometh".
Best wishes and regards,
Irvin W. Rosenzweig, CFP®, ChFC®, CLU®, CRPS®, AEP®
Rosenzweig & Associates
*More information may be found on the IRS.gov website.