Ready or not - here it comes! Tax filing can be confusing and stressful. Here's a few things you can do to make this process a little smoother.
As tax time rolls around each year we all start getting the necessary documents for proper filing of our taxes. You're not alone if you find all of these important forms a little confusing! Besides the W-2 which is used to report wages, form 1099 is widely used for a variety of purposes. Here are the basics you need to know about this multi-functional form.
There are a number of reasons why a Roth IRA is a smart way to invest for retirement. For most investors, tax benefits rank #1 in their reasoning for investing in a Roth IRA.
One of the misconceptions we are faced with in the financial services industry is the idea that all “financial people” the same. We sometimes hear the question,
"What is the difference between the advisors at Creekmur Wealth and the insurance agent or broker's office down the street?"
Focusing on Your Strategy During Turbulent Times.
Investors are people, and people are often impatient. No one likes to wait in line or wait longer than they have to for something, especially today when so much is just a click or two away.
This impatience also manifests itself in the financial markets. When stocks slip, for example, some investors grow uneasy. Their impulse is to sell, get out, and get back in later. If they give in to that impulse, they may effectively pay a price.
How much should you really be saving for the retirement future you envision?
Making sure you have enough money saved for retirement is one of the top concerns for those of us not independently wealthy. In a perfect world, we will figure out how much we need to live on by calculating our monthly and yearly retirement expenses, factoring in inflation, and computing any additional income like Social Security.
Changes for 2020
The I.R.S. increased the annual contribution limits on IRAs, 401(k)s, and other widely used retirement plan accounts for 2020. Here’s a quick look at the changes.
*As of January 1st, 2020, you can put up to $6,000 in any type of IRA, for both tax years 2019 and 2020. The limit is $7,000 if you will be 50 or older at any time in 2020.1,2
*Annual contribution limits for 401(k)s, 403(b)s, the federal Thrift Savings Plan, and most 457 plans also get a $500 boost for tax years 2019 and 2020. The new annual limit on contributions is $19,500. If you are 50 or older at any time in 2020, your yearly contribution limit for one of these accounts is $26,000.1,2
Three important factors when it comes to your financial life.
Regardless of how the markets may perform, consider making the following part of your investment philosophy:
Diversification. The saying “don’t put all your eggs in one basket” has real value when it comes to investing. In a bear or bull market, certain asset classes may perform better than others. If your assets are mostly held in one kind of investment (say, mostly in mutual funds or mostly in CDs or money market accounts), you could be hit hard by stock market losses, or alternately, lose out on potential gains that other kinds of investments may be experiencing. There is an opportunity cost as well as risk.1
Some specifics about the "second act."
Does your vision of retirement align with the facts? Here are some noteworthy financial and lifestyle facts about life after 50 that might surprise you.
Up to 85% of a retiree’s Social Security income can be taxed. Some retirees are taken aback when they discover this. In addition to the Internal Revenue Service, 13 states currently levy taxes on some or all Social Security retirement benefits: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont, and West Virginia. (West Virginia, incidentally, is phasing out such taxation.)1
A longer repayment time can be an advantage.
The conventional wisdom about taking a loan from your 401(k) plan is often boiled down to: not unless absolutely necessary. That said, it isn’t always avoidable for everyone or in every situation. In a true emergency, if you had no alternative, the rules do allow for a loan, but they also require a fast repayment if your employment were to end. Recent changes have changed that deadline, offering some flexibility to those taking the loan. (Distributions from 401(k) plans and most other employer-sponsored retirement plans are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty. Generally, once you reach age 70½, you must begin taking required minimum distributions.)