Episode #17: Year-End Taxes
November 1, 2018
“RETIRE WITH INTEGRITY” PODCAST
We are quickly approaching 2019, and it’s time for some year-end tax planning. Have you taken your RMDs? Be sure you’ve considered your tax liabilities.
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- RMD stands for required minimum distributions. Basically, when you turn 70 1/2, the IRS wants their share of your retirement savings, so they require you to start withdrawing from your qualified retirement accounts. Your RMDs must start in the year that you turn 70 1/2, so if you turn 70 in April of 2018, your first RMD would need to be taken in 2018. If you turn 70 in October of 2018, your first RMD would be taken in 2019. The government can hit you with a 50 percent penalty if you fail to take your RMD, so as you consider your year-end tax planning, make sure you’re thinking about RMDs. Your advisor can help you understand the nitty gritty details.
[00:36] – Multiple Retirement Accounts Create Problems.
- If you have multiple retirement accounts, your RMD withdrawals can quickly get cumbersome. Let’s say you forget about an old 401(k) or IRA. When the time comes to take your RMDs, if you’ve forgotten that account exists, you could find yourself in a bit of a pickle with the IRS. You need to consolidate your accounts and get financially organized.
[2:20] – Paying The Penalty.
- As we mentioned earlier, Uncle Sam wants his cut of your retirement. If you don’t take your RMD, the IRS will penalize you up to 50 percent of the amount you were supposed to take. Don’t forget, that amount is in addition to the taxes you’ll already be paying depending on your tax bracket. Those taxes will quickly start to add up.
More To Learn:
- [3:00] – What Happens When You Have To Pay The Penalty?
The host: Brian Bowen – Contact
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