Medical expenses can run up your expenses a lot. For that reason, the new tax law gives people a break by sweetening the long-time tax deduction for health care, at least for a couple of years.
This is a good time to consider converting a traditional individual retirement account into a Roth IRA. Tax rates are low but unlikely to stay that way. Here's a long-term strategy that takes advantage of the current tax policy and economic fundamentals - a tax-efficient retirement investment and avoids a new twist in the Tax Cut And Jobs Act that penalizes widows.
Although a picture is said to be worth a thousand words, out of respect for your time, here are 290 words about this chart of U.S. stock market performance over an amazing decade.
The new tax law doubles what you can leave loved ones' tax free when you die and that's really bad for your alma mater. Tax breaks for donations to your alma mater may no longer make the grade with you. Here's why:
Under the new tax law, business owners are entitled to deduct 20% of "qualified business income." The test for qualifying a tax break on 20% of business income is defined in the Tax Cuts and Jobs Act (TCJA) and summarized here along with a simple illustration.
If you're a pre-retiree, your returns on fixed income investments may be much lower than your parents' portfolio.
If you spend your professional life giving financial advice, you learn to appreciate every day.
Planning makes you immortal. It ensures the next generation will be just fine. This is something you may not learn or even understand until your 60s or 70s. If you're lucky, you come to hold a baby with dreams for the best things that could happen in the future.
In the long arc of financial history, Americans are coming off a 50-year aberration and returning to normal interest rates.
The new federal tax code affects the return you'll file in Spring 2019.
- Read More
The myRa Is Cut Short, But Other Options Abound
The myRA is going the way of the VCR. Citing unsustainable costs, the Treasury Department has announced it is closing down the program for this retirement savings vehicle. Participants will be notified about their options for moving funds into other investments.
The myRA was pitched as a way for moderate-income people to save for retirement and was designed to resemble the Roth IRA.
Just as in a Roth IRA, MyRA contributions were made with after-tax dollars, and withdrawals from the account during retirement were exempt from federal income tax. Unlike with a Roth, however, the MyRA had only one investment option: U.S. government savings bonds. So, you weren't risking principal, but yields were low.
Contributions were limited to $5,500 a year ($6,500 if you were 50 or older), but availability of this saving vehicle was phased out for upper-income taxpayers. And once your account balance reached $15,000, you had to roll over the funds to a Roth IRA, letting you choose from a wider array of investment options.
According to the Treasury Department, the myRA program has cost taxpayers $70 million, with projections that it would take $10 million a year to keep it going. It made the decision in mid-2017 to shut down the program. Yet most retirement savers still have numerous other options at their disposal.
© 2018. All Rights Reserved.