Our daily roundup of retirement news your clients may be thinking about.
Retirees can expect changes to their 2018 tax returns thanks to the reforms under the Tax Cuts and Jobs Act, writes an expert on TheStreet. For example, seniors are more likely to opt for the standard deduction, which increased under the new law, but those who want to maximize the tax deductions for charitable giving should consider “bunching” their years’ worth of donations in a single year, writes the expert. “Full retirement age taxpayers who were investing in tax-free municipal bonds and who just startesd collecting Social Security last year might be in for a surprise when filling out their 2018 tax return.”
Retirees who waited until December 2018 to take the required minimum distributions from their traditional IRAs had to sell assets at depreciated value and incurred losses, writes an expert on CBS Moneywatch. That’s because their 2018 distribution was based on the account value as Dec. 31, 2017, the year the market posted a robust performance, but many stock prices declined sharply last year, writes the expert. To avoid this scenario, retirees should withdraw the money in the early weeks of the year. “That way you'll have it available to spend during the year, without worrying about whether the stock market will decline as the year progresses.”
A retiree cannot expect his spouse’s income to reduce his Social Security benefits, as his benefits are based on his work record, according to this Q&A article from Forbes. However, his spousal benefits on his wife’s record would be subject to earnings deductions in case her earnings exceed the exempt amount. Moreover, her income might also have an impact on the amount of his benefits that would be taxed as ordinary income.
Being out of work even temporarily can be a scary prospect, and those who find themselves in that situation should review their finances, according to this opinion article on MarketWatch. They should also avoid making any moves that could create financial problems in the future. For example, those who consider borrowing from their 401(k) plan should weigh the short-term tax consequences and the long-term impact of such a move on their retirement savings.
