Free From Broke

A Personal Finance Blog for Regular Folks

Retirement

What Are Required Minimum Distributions (RMDs) and How Do They Affect Your Retirement?

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It seems like when you get to retirement you should be able to take it easy.

Your money is in a tax-advantaged account, and you can take out money as you need.  No reason to fuss about it.

Unfortunately, this isn’t always the case.

While you might think that you can put off withdrawing money from your tax-advantaged account if you have income from other sources, this isn’t true if your account is subject to required minimum distributions (RMDs).

What are RMDs (Required Minimum Distributions)?

The RMD is a required amount that you are forced to take from certain tax-advantaged retirement accounts — even if you don’t need the money.

If you don’t take your RMD when you are supposed to, you can be charged penalties that can reduce the value of your retirement account.

RMDs are not required for Roth IRAs.  However, other retirement accounts come with RMDs.  This means your Traditional IRA, and other non-Roth IRAs are subject to RMDs.  Additionally, all 401(k) and 403(b) accounts are subject to RMDs.
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Watch Out for Senior Fraud and Scams

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It’s sad, but true: Seniors are often targets of financial fraud, and it is costing them big.

According to the Certified Financial Planner Board of Standards, the average senior victim of fraud loses about $140,500.  That’s a fairly significant amount of money, especially considering that many seniors are living on a fixed income.

If you have older relatives, it’s important to be on the look out for financial abuses and outright fraud.

Here are some of the senior fraud and scams to be on the watch for:

Social Security and Medicare Scams

One of the ways that many seniors are scammed is through fraudsters claiming to be associated with Social Security and Medicare.
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Signs You Have a Bad 401(k) Plan and What to Do About It

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Sometimes we’re just happy to be with an employer that has a 401(k) plan, since so many don’t.

It may not even seem important whether or not it’s a good plan or a bad one – at least not at the beginning.  After all, any 401(k) plan is better than having none at all.

But there are bad 401(k) plans out there, and that becomes even more important and obvious the longer you’re in one.

What are Some Signs of a Bad 401(k) Plan?

No employer match

One of the real incentives to invest money in a 401(k) plan is an employer match.

A typical match is 50%, where the employer contributes 3% of your income while you contribute 6% out of your compensation.  Employer matching contributions can be more or less generous.

Some employer plans provide no match at all.  In and of itself this does not indicate a bad 401(k), but in combination with other negative factors it’s a strong sign.

Poor or limited investment choices

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5 Strategies for Keeping the Peace When Parents Move Back in with Their Adult Children

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As much as parents love their children, some parents prefer that their grown children fly the coop and don’t come back to live. 

Having adult children move back in with you can be challenging and often requires that you establish firm boundaries and ground rules so both generations can live in peace under the same roof.

While much has been written about the boomerang generation, not much has been said about the reverse trend–parents moving in with their adult children thanks to an inadequate retirement or health problems.

If you foresee that there may be a day when your parents could potentially move in with you, it is important to begin preparing now, years before it may actually happen.

Here are some strategies to help keep the peace when parents move back:

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The Roth vs. Traditional IRA – Which is Best for You?

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If you’re considering adding an Individual Retirement Arrangement (IRA) as part of your overall retirement plan, you may be wondering whether a Roth or traditional account will work better.

Depending on your circumstances, it could be either, or it can even be both.

What is a Traditional IRA? – Basics

Traditional IRAs allow you to save up to $5,000 ($5,500 for 2013) in a self-directed, tax deferred account.  You can also increase the amount of that contribution by $1,000 if you are age 50 or older.

Not only will this allow you to build your own retirement portfolio, but you can also contribute to an IRA even though you’re covered by another retirement plan.  However there are limits on the tax deductibility if you are covered by another plan.

For single taxpayers, the IRA deductibility begins to phase out with an income of $58,000 per year.  It completely phases out at $68,000.
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