Quick Read Roth conversions increase AGI and can trigger higher tax brackets, Medicare IRMAA surcharges, and taxation of up to 85% of Social Security benefits. Medicare IRMAA surcharges use a two-year lookback, so conversions affect premiums two years later. Converting smaller amounts over multiple years reduces total tax cost versus single large conversions crossing multiple thresholds. A recent study identified one single habit that doubled Americans’ retirement savings and moved retirement from ...

Saving for retirement in a traditional IRA or 401(k), as opposed to a Roth, can seem like a good idea when you're eager to lower your tax bill. But traditional retirement plans come with a huge drawback. Not only are withdrawals subject to taxes, but you may eventually have to take withdrawals even if you don't want to. Those mandatory withdrawals are known as required minimum distributions, or RMDs. And they kick in at age 73 or 75, depending on the year you were born. Will AI create the world's first t ...

Core Insights - A significant disconnect exists between Americans and their retirement savings, with 25% unable to name their retirement account provider [1][8] - The number of dormant workplace accounts has increased to over 30%, up from 21% in 2012, indicating a growing issue of "forgotten" accounts [1] Survey Findings - The survey conducted by PensionBee involved 1,000 U.S. retirement savers, revealing that 40% consult their account provider for questions, while only 4% use AI for retirement inquiries [8] - A large portion of respondents (31%) check their retirement accounts only once or twice a year, and 9% never review their allocation or do so every three years [8] - 55% of respondents have never consolidated old accounts, leading to fragmented savings across multiple providers [8] Risks of Inactivity - Inactive accounts face two major risks: asset misallocation, where portfolios may become misaligned with a saver’s risk tolerance, and automatic rollover of dormant accounts under $7,000 into Safe Harbor IRAs, which may not grow effectively [3][8] Company Overview - PensionBee is a leading retirement savings provider managing $10 billion in assets and serving over 300,000 customers globally, focusing on simplicity and transparency [5] - The company offers various IRA options, including Traditional, Roth, SEP, and Safe Harbor IRAs, with ETF-backed portfolios [5]

When you're in the process of building retirement wealth, it's important to choose a home for your savings carefully. And that may mean choosing between a traditional retirement account versus a Roth. The upside of traditional IRAs and 401(k)s is that your money is contributed on a pre-tax basis, allowing you to shield income from the IRS. Roth IRAs and 401(k)s, on the other hand, are funded on an after-tax basis, so there's no immediate IRS benefit to enjoy. Where to invest $1,000 right now? Our analyst ...

Quick Read RMDs increase taxable income and can trigger taxes on Social Security benefits and higher Medicare premiums. QCDs transfer RMD funds directly from IRAs to charities without triggering taxes. The 2026 QCD limit is $111,000 per person or $222,000 per couple. A recent study identified one single habit that doubled Americans’ retirement savings and moved retirement from dream, to reality. Read more here. A lot of people opt to save for retirement in a traditional IRA or 401(k) without rea ...

Core Insights - A Roth conversion is a trade-off involving immediate tax payments for potential future tax benefits [1] Group 1: Roth Conversion Overview - A Roth conversion transfers funds from a traditional IRA to a Roth IRA, with the converted amount taxed as ordinary income in the year of conversion [2] - Future qualified withdrawals from a Roth IRA are tax-free, providing a long-term tax advantage [2] Group 2: Tax Implications and Timing - It is not necessary to convert the entire IRA balance at once; multiple smaller conversions can be more tax-efficient [3] - Large conversions may push individuals into higher tax brackets, negating potential long-term benefits [3] Group 3: Advantages of Roth IRAs - Roth IRAs do not have required minimum distributions (RMDs) during the owner's lifetime, unlike traditional IRAs which require RMDs starting at age 73 [4] Group 4: When Roth Conversions are Beneficial - Roth conversions are most advantageous during low-income years, such as early retirement or career transitions, when individuals are in lower tax brackets [5] - Additional scenarios where conversions may be beneficial include expecting higher future tax rates, having cash available to pay taxes outside the IRA, and wanting to reduce future RMDs [6] Group 5: Potential Drawbacks of Roth Conversions - The primary drawback is the immediate tax liability, which can be substantial for large IRAs and may lead to higher tax brackets or increased Medicare premiums [7]

Quick Read Ramsey and Orman rarely agree but both prioritize maximizing Roth IRA contributions and eliminating debt before retirement. Roth IRAs eliminate future tax uncertainty and required minimum distributions for original account holders. Paying off high-interest debt delivers risk-free returns equal to the eliminated interest rate. A recent study identified one single habit that doubled Americans’ retirement savings and moved retirement from dream, to reality. Read more here. Dave Ramsey an ...

Core Insights - Many Americans are anxious about retirement planning, and financial advice from experts like Suze Orman can significantly help alleviate this stress Group 1: Retirement Planning Steps - Step 1: Start saving early by contributing 15% of income to a retirement account, ideally a Roth IRA, to benefit from compound interest [2][3] - Step 2: Reduce spending by analyzing the budget and cutting unnecessary expenses to increase savings for retirement [4][5] - Step 3: Invest in a Roth IRA for tax-free withdrawals in retirement, as it allows for tax payments now rather than later, which can impact income and lifestyle during retirement [6][8]

Key Points Lowering taxes in retirement could boil down to the right strategies. Choose tax-efficient investments and be strategic with your RMDs. Know your tax credits and deductions, and delay income that adds to your tax bill. Investors rethink 'hands off' investing and decide to start making real money For many retirees, taxes don’t disappear once the paychecks stop; they simply change form. Withdrawals from retirement accounts, Social Security benefits, required minimum distributions, and ev ...

Core Insights - The transition from accumulation to distribution phase in retirement can be psychologically and financially challenging for individuals, leading to concerns about cash flow and spending their savings [1][4]. Financial Planning - Individuals nearing retirement often have significant savings, such as a $2.7 million balance in a traditional IRA, with a diversified investment strategy of 60% equities and 40% bonds [3]. - Required Minimum Distributions (RMDs) begin at age 73, with initial withdrawals projected at $100,000 annually, increasing over time [3][6]. Spending Behavior - Research indicates that many retirees are hesitant to spend their savings, with some not touching a significant portion of their nest eggs due to uncertainty about sustainable withdrawal rates and future expenses [4]. - Spending patterns typically decline in later retirement years, often due to reduced travel and increased healthcare costs [4]. Tax Considerations - RMDs can impact tax brackets and may lead to Medicare surcharges, suggesting the importance of strategic withdrawal timing and potential Roth conversions [7]. Emergency Preparedness - Individuals may not have long-term care insurance but can rely on Medicare and home equity to cover unforeseen medical expenses, alongside liquid assets for emergencies [8].