Latest news with #Retirement
Forbes
a day ago
- Business
- Forbes
What You Need To Know About The New Retirement Account RMD Penalty
Retirement account owners above a certain age must take annual distributions from their accounts each year, known as required minimum distributions. Failure to take the full distribution can incur a penalty. The good news is that the penalty recently was reduced. The beginning age for RMDs changed several times in recent years from 72 for those born before 1951, 73 for those born from 1951 through 1959, and 75 for those born in 1960 or later. The current rule is the first RMD must be taken by April 1 of the year following the year you turn 73. If you turn 73 in June 2025, you have until April 1, 2026, to take that first RMD. The RMD is computed by taking the traditional IRA balance as of December 31 of the previous year and dividing it by your life expectancy factor from the tables in the back of IRS Publication 590-B, available free on the IRS website. Most people use Table III; married people whose spouses are more than 10 years younger than they are use Table II. Beneficiaries use Table I. When you have multiple IRAs, compute the RMD separately for each IRA. Then, if you want you can aggregate the RMDs and take the total from the traditional IRAs in any ratio you want. RMDs also must be taken from 401(k)s and other traditional retirement accounts. But you can't aggregate RMDs from those accounts. They must be computed and taken from each account. It's important to distribute at least the full amount of the RMD by December 31. The IRS realized some years ago that many people weren't taking RMDs or calculated them incorrectly. So, the IRS stepped up its tracking and enforcement of RMDs and is quick to impose penalties. Thanks to a recent law, the penalty is only 25% of the amount that should have been distributed but wasn't, instead of the longstanding 50%. In addition, the penalty can be reduced to 10% if the mistake is corrected in a timely manner. To qualify for the 10% penalty, you generally must correct the mistake by taking the RMD before the IRS sends you a notice of deficiency or before the last day of the second taxable year that begins after the year in which the RMD should have been taken, whichever is earlier. The penalty can be avoided completely by convincing the IRS to waive it because you had a reasonable cause for missing the RMD. But there's no guarantee the IRS will waive the penalty. If you take the time to apply for a waiver and the IRS denies the request, then it probably will be too late to qualify for the 10% penalty and you'll be stuck with the 25% penalty. Most IRA custodians compute RMDs for their customers and include it in at least one of the monthly statements or the online account. But you don't want to rely on this computation. In a recent case, an IRA owner was hit with a penalty by the IRS because the custodian had the wrong birth date for the customer in its records and computed the wrong RMD amount. The taxpayer lost the case and had to pay the penalty.
Forbes
a day ago
- Business
- Forbes
Roth Conversion Tax Reductions: What Many Investors Don't Know
D. Scott Kenik is the Founder and Principal of Wealth Concepts Group, LLC. Roth conversions are one of the most powerful financial planning tools available. While they're not right for everyone, for many investors, a Roth conversion can unlock huge tax savings. There are lots of benefits to Roth conversions. For example: • You lock in today's tax rates and pay the taxes before rates increase. • The withdrawals are tax-free in retirement. • Roth conversions eliminate Required Minimum Distributions. • Your beneficiaries receive their inheritance tax-free, and they can continue to grow their inheritance tax-free for up to 10 years. • All eight retirement taxes—federal income tax, state income tax, fee/commission 'tax," Medicare/IRMMA tax, Social Security tax, two widow's penalties, and beneficiary tax—can be significantly reduced or eliminated forever with a Roth conversion. Analysis Matters Of course, a Roth conversion may not be right for everyone. Everyone's financial situation is different. Account values, living expenses and income needs vary, and each can affect the benefits of a Roth conversion. For that reason, a detailed Roth conversion analysis is vital. A properly prepared analysis compares the cost and financial benefits of doing a Roth conversion versus the cost of not doing a conversion. This way, you can see the value that it will have for you and determine if it is a good option for your financial situation. Case Study: Roger And June Let's take a quick look at a case study for Roger and June. Roger is 64 and June is 63. They have a $1.3 million IRA. Roger's monthly Social Security is $3,800, and June's is $2,600. They have a pension that pays $24,000 per year and interest and dividend income totaling $15,000 per year. A proper analysis looks at their assets and income and calculates the cost of doing a Roth conversion and compares it to the cost of not converting out to age 90. In their case, it would cost them approximately $480,000 to do a single-year conversion, and $397,000 to do a multiyear conversion. Their savings would be over $1 million. The downside of a Roth conversion is the tax cost; Roger and June would have to pay $480,040 or $396,438, depending on how they structured the conversion. The amount that they convert becomes taxable income, and they will pay ordinary income tax on the conversion amount. The cost of conversion depends on your tax bracket; large conversions in higher tax brackets can be very expensive. A Strategy To Reduce Roth Conversion Taxes There is a little-known strategy that incorporates an LLC into a self-directed IRA that can reduce the tax cost of Roth conversions by 35%. The process starts with a self-directed IRA that holds money in cash and investments. Let's use $1 million for this example. An LLC is then put into that IRA. It's just a shell of an LLC—no assets, no business activity, just a shell. The client is the manager of the LLC and the signer on the LLC's empty bank account. They have complete access and discretion over the investing activities of the LLC, following the rules that apply to all IRAs. Now, the million dollars in cash and investments gets moved into the LLC. At this point, the only asset in the IRA is the LLC. The million dollars is in the LLC, but it's invisible to the IRA itself. To do the Roth conversion, the custodian will ask for a valuation of the LLC. The custodian sees that the only asset in the IRA is the LLC, and the custodian has no idea what the LLC is worth. The valuation of the LLC is the key to the Roth conversion tax reduction. The operating agreement for the LLC contains restrictions on certain activities of the LLC that make the LLC worth less. The LLC restrictions that are put into place relate to matters of corporate governance—like how you can add or remove a member, under what circumstances you can sell or liquidate the LLC, etc. The restrictions will not impede the ability to invest, access or control the money; they only affect the LLC's valuation. Those restrictions qualify the LLC for certain IRS-recognized valuation discounts. These discounts are then applied to the Roth conversion, which results in a discount on the tax. This is how the Roth conversion tax is reduced by 35%. After receiving the LLC valuation, the custodian then completes the recharacterization of the traditional IRA to Roth, and the custodian sends a 1099 for $650,000 at the end of the year instead of $1,000. This reduces the conversion tax by at least the same 35%—and perhaps more based on your other taxable income. Not just any lawyer or CPA is qualified to do this, as many have never heard of it. Be sure to work with professionals who are educated and experienced in this strategy. A Tool For Everyone This is just one of the tax reduction strategies that very wealthy people use, and it is just as effective on all levels of IRA amounts and income. The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation. Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?
Yahoo
2 days ago
- Entertainment
- Yahoo
Legendary '70s Rock Band Urged by Fans to Retire After Viral Concert Video — 'It's Sad'
Legendary '70s Rock Band Urged by Fans to Retire After Viral Concert Video — 'It's Sad' originally appeared on Parade. AC/DC has been rocking stages for over 50 years, but after recent concert footage from their "Power Up Tour" went viral, some fans are questioning whether it's time for the legendary band to call it quits. The footage, captured at Gillette Stadium on May 4, shows the group mid-performance on their North American leg of the tour. In the viral clip — now racking up over 150,000 likes and nearly 3 million views — guitarist Angus Young takes center stage in his signature schoolboy look, wearing blue velvet shorts. He energetically chants and shouts into the mic during a live version of "T.N.T." However, it wasn't Angus' outfit that caused a stir in the comments. Instead, fans zeroed in on lead singer Brian Johnson's vocals, claiming he sounded off-key. "I was going to get tickets until I saw this,' one person wrote. Another added, 'yeah lads it might be time to stop." The sentiment echoed through hundreds of comments — with some fans expressing disappointment in a show they hadn't even attended. "I really wanted to see them this year.. now I dont. thank you," one user said. Another wrote, "Gotta say, Angus is really pulling the load on this tour. They'll always be my favourite band by far, but I'm sitting out this tour." While some fans called for retirement, others were quick to defend AC/DC. "Idc if they sound bad in this. These guys are absolute legends…(still) doing this into their 70's is incredible," one TikTok user wrote. Another fan commented, "why are people hating, they are adorable. i'd go to see them, they are doing so well to be touring at this age." Despite the divided opinions online, the tour has received praise from critics and major publications. Rolling Stone Germany reportedly said that "AC/DC electrified the stadium with a thunderous performance that left the crowd roaring for more," and The Guardian described the show as "a poignant lesson on the power of rock'n'roll." AC/DC has been performing since the 1970s, and they don't seem to be slowing down anytime soon. The band just announced an extension to their tour, adding five more shows in their home country of Australia to close things out. Even as the rockers age, one thing remains undeniable — they're still bringing high-energy performances of iconic hits like 'Thunderstruck,' 'Back in Black' and 'You Shook Me All Night Long.' If you manage to snag tickets, you may hear a few flat notes here and there, but the amps are loud enough to drown out your complaints anyway. Legendary '70s Rock Band Urged by Fans to Retire After Viral Concert Video — 'It's Sad' first appeared on Parade on Jun 27, 2025 This story was originally reported by Parade on Jun 27, 2025, where it first appeared. Solve the daily Crossword
North Wales Chronicle
3 days ago
- Entertainment
- North Wales Chronicle
Derek Thompson signs off at Wolverhampton
Thompson announced late last year he would retire from commentating in 2025 and subsequently identified Tuesday night's six-race fixture at Dunstall Park as his last ahead of his upcoming 75th birthday. With well wishers aplenty on track, 'Tommo' called home the first three winners on the card, his final race being the appropriately named It's A Photo – Big Fella EBF Restricted Maiden Fillies' Stakes. Sadly no photo but it's an exemplary final race call from @tommoracing! 👏 Best of luck in your retirement big fella! 🙌 — At The Races (@AtTheRaces) July 22, 2025 The Marco Botti-trained Space Bear (100-30) was a decisive two-length winner in the hands of Luke Morris, but that did not stop Thompson having some fun inside the final furlong, as he said: 'Space Bear now takes it up, from Jowalla, coming from a long way back is Lyra Lea, but it's Space Bear whose going to win the It's A Photo – Big Fella European Breeders Fund Maiden Stakes!' Ian Bartlett commentated on the final three races, but Thompson remained in the thick of the action and was on hand to present the connections of Ballsgrove Boy with their winner's prize following his success in the concluding Thanks For Everything Tommo – Happy Retirement Handicap. Thompson told Sky Sports Racing: 'It has been absolutely incredible, I'm nearly shedding a tear. It's a ridiculous as I'm a tough cookie, but this is marvellous tonight. 'I've enjoyed it and people have come from all over to be here tonight. Normally after the last race people are rushing off to their cars but we'd had thousands here, it's superb.' On his final call, he added: 'I'll never ever forget it. I'm quite moved and it's difficult to concentrate as I'm not working any more – I'm talking into the microphone, but I'm not holding it.' Thompson remains one of the most recognisable figures in the racing industry having spent time commentating on-course and for BBC radio, while also presenting for ITV, Channel 4, At The Races and Sky Sports Racing during a nearly 60-year broadcasting career. He was even part of a three-strong party alongside Lord Oaksey and The Sun's Peter Campling that attempted to negotiate the release of Shergar after the 1981 Derby winner was kidnapped. And while his long spell commentating in Britain has come to an end, Thompson has no intention of hanging up his microphone entirely, with several racecourses continuing to use him as a raceday presenter, while he will also continue his association with racing in Jersey. He said: 'I've got Ascot at lunchtime on Friday and then York on Friday evening, Ascot on Saturday and then go to Jersey on Saturday night/Sunday. 'I am going to settle down a bit and enjoy. I am going to miss the commentary because the commentary box is the best view and the best seat in the house.' Speaking to Sky Sports Racing presenter Simon Mapletoft, Thompson signed off perfectly with: 'I've had a great career. Thanks big fella and by the way, it's a photo!'
Leader Live
3 days ago
- Entertainment
- Leader Live
Derek Thompson signs off at Wolverhampton
Thompson announced late last year he would retire from commentating in 2025 and subsequently identified Tuesday night's six-race fixture at Dunstall Park as his last ahead of his upcoming 75th birthday. With well wishers aplenty on track, 'Tommo' called home the first three winners on the card, his final race being the appropriately named It's A Photo – Big Fella EBF Restricted Maiden Fillies' Stakes. Sadly no photo but it's an exemplary final race call from @tommoracing! 👏 Best of luck in your retirement big fella! 🙌 — At The Races (@AtTheRaces) July 22, 2025 The Marco Botti-trained Space Bear (100-30) was a decisive two-length winner in the hands of Luke Morris, but that did not stop Thompson having some fun inside the final furlong, as he said: 'Space Bear now takes it up, from Jowalla, coming from a long way back is Lyra Lea, but it's Space Bear whose going to win the It's A Photo – Big Fella European Breeders Fund Maiden Stakes!' Ian Bartlett commentated on the final three races, but Thompson remained in the thick of the action and was on hand to present the connections of Ballsgrove Boy with their winner's prize following his success in the concluding Thanks For Everything Tommo – Happy Retirement Handicap. Thompson told Sky Sports Racing: 'It has been absolutely incredible, I'm nearly shedding a tear. It's a ridiculous as I'm a tough cookie, but this is marvellous tonight. 'I've enjoyed it and people have come from all over to be here tonight. Normally after the last race people are rushing off to their cars but we'd had thousands here, it's superb.' On his final call, he added: 'I'll never ever forget it. I'm quite moved and it's difficult to concentrate as I'm not working any more – I'm talking into the microphone, but I'm not holding it.' Thompson remains one of the most recognisable figures in the racing industry having spent time commentating on-course and for BBC radio, while also presenting for ITV, Channel 4, At The Races and Sky Sports Racing during a nearly 60-year broadcasting career. He was even part of a three-strong party alongside Lord Oaksey and The Sun's Peter Campling that attempted to negotiate the release of Shergar after the 1981 Derby winner was kidnapped. And while his long spell commentating in Britain has come to an end, Thompson has no intention of hanging up his microphone entirely, with several racecourses continuing to use him as a raceday presenter, while he will also continue his association with racing in Jersey. He said: 'I've got Ascot at lunchtime on Friday and then York on Friday evening, Ascot on Saturday and then go to Jersey on Saturday night/Sunday. 'I am going to settle down a bit and enjoy. I am going to miss the commentary because the commentary box is the best view and the best seat in the house.' Speaking to Sky Sports Racing presenter Simon Mapletoft, Thompson signed off perfectly with: 'I've had a great career. Thanks big fella and by the way, it's a photo!'
