The financial news that actually matters
An overdraft fee arrives quietly and stings out of proportion to what caused it. A single debit-card purchase for a few dollars, made when an account is short, can draw a flat fee many times the size of the transaction. What most account holders never learned is that this coverage on everyday debit-card swipes and…
For years the biggest worry hanging over a 529 college savings plan was what happens to the money if the child does not need all of it. A scholarship, a cheaper school, or a student who skips college entirely could leave a grandparent or parent staring at a balance that would be taxed and penalized…
Losing a spouse reshapes a household’s taxes almost as sharply as its daily life, and the change usually arrives at the worst possible moment. The year after a death, many widows and widowers discover that their income no longer fits under the wider joint tax brackets, and the bill climbs even though the money coming…
Most people know that a bank reports large cash transactions to the government once they cross $10,000. What far fewer understand is that deliberately keeping deposits under that line — breaking $12,000 into two trips of $6,000, say — can itself be a federal crime, even when every dollar is honestly earned. Older Americans who…
A Medicare Advantage plan that fit perfectly last year is not guaranteed to fit this year. These private plans, which now cover more than half of all Medicare beneficiaries, are allowed to redraw their doctor networks, change which drugs they cover, and adjust what they charge at the start of each year. A retiree can…
Medicare’s prescription-drug coverage carries the same trap as Part B: sign up late without a good reason and the government attaches a surcharge to the premium that never comes off. It catches healthy retirees who take few or no medications at 65 and see no reason to pay for a drug plan. Years later, when…
Original Medicare leaves gaps — deductibles, copays and a 20% share of many bills with no annual cap. Millions of retirees plug those holes with a Medigap policy, private supplemental coverage that pays what Medicare does not. But the right to buy one on favorable terms is not permanent. There is a single, one-time window…
For decades, a traditional retirement account lets savings grow untaxed. The government eventually wants its share, and it enforces that with one of the harshest penalties in the tax code. Retirees who forget to pull out the required amount each year — or who miscalculate it — can hand the IRS a quarter of the…
Moving a 401(k) into an IRA is one of the most common financial steps a person takes when leaving a job or retiring, and it is usually tax-free. But there is a wrong way to do it that hands the government a fifth of the account for months and can, if a person slips, turn…
For most of retirement, a traditional IRA or 401(k) can sit untouched, growing without a tax bill. That freedom does not last. The government eventually forces withdrawals so it can finally collect the taxes it deferred for decades, and the age at which those forced withdrawals begin recently moved. Knowing the current starting age, and…