Our daily roundup of retirement news your clients may be thinking about.
Data from Fidelity show that the number of 401(k) accounts with $1 million or more in balance increased to 150,000 in the fourth quarter last year from 93,000 recorded in the period in 2016, according to this article on CNBC. The percentage of female 401(k) participants increased to 20% last year from 10% in 2005, Fidelity says. Moreover, 30% of 401(k) participants boosted their contribution rate last year, with the average rate rising to 8.6%.
Under the new tax law, traditional IRA investors can no longer undo a Roth conversion when it does not turn out to be favorable to them, according to this article on Morningstar. "That means that would-be IRA converters will need to stick with their conversions — and pay any taxes due upon them as well — from here on out. Do-overs are over for new conversions," writes Morningstar's Christine Benz.
Working longer and delaying Social Security could result in a bigger retirement benefit, according to this article on Motley Fool. However, seniors will be better off applying for the benefit early if it will enable them to file for a spousal benefit that is greater in value than their own retirement benefit.
Investors can make better investing decisions to secure their retirement by using the Callan Periodic Table of Investment Returns, writes an expert on Money. " The table not only lays out two decades’ worth of performance history for a broad swath of investments, it also allows you to see which of those investments have been leaders or laggards from one year to the next."
Retirement investors should consider setting up a Roth IRA even if they are subject to lower tax rates under the new law this year, according to this article on Reno Gazette Journal. That's because the tax rates could still rise in the foreseeable future. A Roth IRA is recommended to clients who expect to move to a higher tax bracket in retirement, as distributions will be tax-free and won't boost their taxable income.
