Last-chance moves for retirees to cut their 2016 tax bill: Retirement Scan

Register now

Last-chance moves for retirees to cut their 2016 tax bill
Retirees are advised to determine their taxable income for 2016 before the year ends, as they may move to the 15% tax bracket, according to this article on Kiplinger. This will give them the opportunity to sell depreciated securities without owing taxes on capital gains. Now may also be the best time for retirees to make charitable donations, do a Roth conversion, and incur more qualified medical expenses to meet the threshold and qualify for a tax deduction.
Tips on the best way to pass your IRA down to your child
A loved one who is named contingent beneficiary of an IRA can own the account as an "inherited IRA" in case the account holder is predeceased by the spouse, according to this article on USA Today. The heir "will be entitled, under today's rules, to withdraw the money gradually, over her life expectancy,” says an expert. “Thus, though she must withdraw from it a certain amount each year — it’s called a required minimum distribution, or RMD — and pay tax on that amount, the required withdrawals would be small, especially in the early years.”

Why you might want a reverse mortgage
A reverse mortgage offers a good opportunity for retirees to tap their home equity and create an extra income stream in retirement, says an expert in this article on Money. Taking a reverse mortgage should be considered if retirees intend to stay in the home and the option is not their last resort, the expert says. They should also be up-to-date with the property tax payments, so they won't need to repay the mortgage unless they decide to move out or they die, the expert

Medicare holds premium increase for high earners to 10%
A third of Medicare beneficiaries can expect their monthly premiums in 2017 to increase 10% to $134 from the current $121.80, according an article in the Wall Street Journal. Monthly premiums for the rest of beneficiaries will rise to $109.00 next year for Medicare Part B. The 10% premium increase for high earning beneficiaries is lower compared with the center's initial forecast of 22% increase in its June report.

Ask Larry: Is file/suspend/reinstate my best option for raising my Social Security?
The file/suspend/reinstate strategy is not an option for an older worker who will turn 65 later this year and intends to retire in June 2017, even if his wife has been on Social Security for four years, according to this article on Forbes. The option is advised for people who want to file for benefits before their full retirement age to allow their spouse or children to collect benefits on their record. Instead, the client should consider a restricted application for spousal benefits when he turns 66 and switch to his own retirement benefit at age 70.

For reprint and licensing requests for this article, click here.