Be careful when passing down a Roth IRA: Retirement Scan

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Our daily roundup of retirement news your clients may be thinking about.

Be careful when passing down a Roth IRA
Retirement investors who intend to leave behind their Roth IRA assets to their loved ones should ensure they follow the rules so their heirs can fully gain from the account's tax advantages, according to this article on The Wall Street Journal. “By far the biggest benefits of the Roth IRA after death are tax-free growth in the account and the fact that distributions can be made without income-tax consequences,” says an expert.
What happens when there’s a mistake in your 401(k)
Employers and retirement-plan sponsors can make mistakes that could be costly for 401(k) participants, so clients are advised to monitor their retirement plans to prevent these mistakes and correct any error as early as they can, according to this article on MarketWatch. This involves checking their paystubs, confirming any changes, and keeping all their plan documents. 401(k) participants who find a mistake in their records should check it against the plan protocol and consider getting help from experts.

3 risks that could derail your retirement plan
Clients with a wrong asset allocation in retirement plans run the risk of not having a comfortable life in their golden years, according to this article on Fox Business. Many retirement investors fail to maintain a margin of safety in their portfolio, putting their retirement security at risk. Other people also fail to prepare for their tax bill in retirement, as they make the mistake of assuming that they will move to a lower tax bracket after they retire.

3 ways to withdraw from your IRA before retirement — penalty-free!
Retirement savers have the option to withdraw the principal from their Roth IRA early without facing any penalty, according to this article on Motley Fool. They will also face no penalty for early IRA withdrawals if they use the funds to buy their first home, cover college expenses, or pay unreimbursed medical costs. Those who have lost their jobs and made IRA withdrawals to cover health insurance premiums are exempt from paying an early withdrawal penalty.

Ask Larry: Will early spousal reduce my wife's retirement benefit?
Although a 63-year-old wife can start collecting her own Social Security retirement benefit early and switch to excess spousal benefit on her husband's record when she reaches full retirement age, this strategy will not enable the couple to maximize their benefits, according to this article on Forbes. A better claiming strategy is for the wife to apply for her retirement benefit when the husband reaches his FRA and he collects a spousal benefit on the wife's record. When the husband turns 70, he can switch to his own retirement benefit and the wife can seek excess spousal benefit on his record

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