Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about
Clients who consider changing their retirement plans due to market disruption from the coronavirus crisis are advised to make a number of considerations before making a decision, according to this article in Motley Fool. They should know whether they have liquid funds outside the market and gauge the impact of the possible changes on their health insurance coverage. Clients must also determine the income that their investment portfolio will generate in retirement and decide if they are willing to get back into the workforce after retirement, according to the article.
Now can be a great time for investors to do a Roth conversion, as they are likely to move to a lower tax bracket because of the current market crisis and face a more favorable tax outcome, says an expert in Morningstar. Those who intend to convert a big amount of their traditional assets should consider spreading the conversion over a number of years to minimize the tax bite, he says. Those who are in the 10% or 12% tax bracket may also want to consider selling appreciated shares, as they will face a zero tax rate on capital gains.
Americans who are expecting a check as part of the $2 trillion stimulus package are advised to spend the windfall wisely, according to this article in Kiplinger. One smart move is to save the money in a traditional IRA, which offers an upfront tax deduction for the contributions. They may also donate the money to charity and get a charitable tax deduction or sock away the funds to a 529 college savings plan, which offers tax-free growth on investments and tax exemption on qualified withdrawals.
Long-term care insurance remains a good option for Americans, as many of them are expected to live longer and suffer age-related illnesses in retirement, writes an expert in MarketWatch. "Long-term care insurance is best for people who have substantial assets — from net worths in the hundreds of thousands up...," he writes. "The policies also give single and childless men and women the security of knowing they’ll have someone to take care of them when they can no longer care for themselves."
Vanguard reclaimed its top spot in J.D. Power’s annual ranking of self-directed investor satisfaction. Charles Schwab retained its position as a leader among DIY investors.
Although the rules for taking premature 401(k) distributions have been relaxed during the ongoing coronavirus crisis, there are a number of considerations that workers need to make before making such a move, according to this article in Yahoo Finance. For starters, they need to compute the net amount they will receive, as the distributions will be subject to income taxes. Under the new rules, clients can have the option of recontributing the funds within three years after the withdrawal to avoid the tax bite.
