To Tap or Not to Tap Your Retirement Savings?

It’s tough times out there for many Americans. We’re seeing record numbers of people filing for unemployment. For those who have lost jobs, it can be scary to think about where the finances will come from to continue paying things such as rent, mortgages, grocery bills, etc. Thus, during these times, it can be tempting to tap into retirement savings, especially if you have managed to build up a decent-sized nest egg. While I strongly, strongly discourage you from using your retirement savings to get you through these tough times, I realize that it may really be the only option Continue reading To Tap or Not to Tap Your Retirement Savings?

Retirement Accounts and Government Coronavirus Relief

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law on March 27. It’s a massive relief package designed to help Americans get through these difficult economic and financial times. Yes, this is the legislation that also includes the one-time payments from the government for those below a certain annual salary. While most of the reporting on the CARES Act tends to focus on helping those of working age who find themselves without a job, it does have some advantages for retirees. First off, many retirees will be eligible to receive the highlight of the legislation–those Continue reading Retirement Accounts and Government Coronavirus Relief

Don’t Be Someone Who Hits Your Retirement Account Too Early

According to a recent study by the Treasury Department and the Joint Commission on Taxation, for every dollar that Americans under the age of 47 save for retirement, they withdraw 20 cents before reaching age 55. That may not sound like much, but that a fifth of a dollar. Furthermore, a 2019 report by the Government Accountability Office found that Americans during their prime working years withdrew almost $70 billion annually from retirement accounts–that is, before they reach retirement age. That’s a lot of money. I get it though, that retirement money can be tempting, especially if times are a Continue reading Don’t Be Someone Who Hits Your Retirement Account Too Early

Make Sure You Understand Early Distribution Exceptions

Thinking about taking an early distribution from your retirement plan and believe you can do so without getting hit with a penalty? You should be very, very careful in doing so. Yes, there are times when taking an early distribution is appropriate and you can avoid an early distribution penalty, but such situations are often few and far between. Aside from avoiding early distributions at all costs, you should really speak with a certified financial planner or retirement expert as part of the consideration process if you are fairly serious about doing so. While there are a number of ways Continue reading Make Sure You Understand Early Distribution Exceptions

Taking Advantage of the IRA Sweet Spot

Did you know that if you are between ages 59½ and 70½, you can take an early distribution from your IRA and not have to worry about the 10% early distribution penalty? You can take a distribution for any reason at all during this “sweet spot” period and not have to worry about getting penalized. You can also choose to not take a distribution during that time period as well since required minimum distributions (RMDs) don’t kick in until after you reach age 70½. Thus, this period offers the most flexibility regarding your IRA and associated retirement money. However, there is Continue reading Taking Advantage of the IRA Sweet Spot

Roth IRA Distribution Under Age 59.5

If you are considering taking money out of your Roth IRA before reaching age 59½, you will need to understand the Roth IRA distribution rules. The rules require that all contributions come out first and are tax and penalty free. Next comes conversion amounts. Contributions on distributed on a “first in, first out” basis and they are income tax free. However, any conversion taken out before reaching the 5-year holding period gets hit with a 10% early distribution penalty, barring any other exceptions. Once a conversion has been held for 5 years, it is not subject to that 10% early distribution Continue reading Roth IRA Distribution Under Age 59.5