Category: Retirement Planning

A worker offered a one-time lump sum instead of a monthly pension check often focuses on the size of the number, without weighing what that number is actually replacing. A pension promises a fixed monthly payment for as long as the retiree lives, sometimes for a surviving spouse as well. A lump sum swaps that…

A retirement account, brokerage account, or life insurance policy generally won’t pay out to a minor the same way it would to an adult beneficiary. Naming a child directly, without more, typically means the money sits with the custodian or insurer while a court appoints someone to manage it on the child’s behalf — a…

A health savings account is often sold as triple tax-advantaged: pretax contributions, tax-free growth, and tax-free withdrawals for medical costs. Less understood is a fourth advantage built into the timing. The money used to reimburse a medical bill does not have to come out the same year the bill was paid, or even the same…

Nursing home care routinely costs several thousand dollars a month, enough to wipe out a couple’s combined savings within a year or two if both spouses’ assets and income counted against Medicaid eligibility the same way they would for a single applicant. Congress addressed that risk in 1988 with a set of protections, known as…

Losing a spouse rearranges a household’s finances in ways that go well beyond grief and paperwork. One of the least understood changes is a shift in tax filing status that often lands the very next year, and it can push the same retirement income into a noticeably higher bracket. The change has nothing to do…

A worker who leaves a job at 55 or older sometimes assumes that touching retirement savings before age 59½ automatically triggers a 10 percent tax penalty on top of ordinary income tax. A narrower rule inside the tax code says otherwise for one specific situation: separating from an employer in or after the year a…

A house that passes to an heir carries a tax advantage that a house sold by its original owner usually doesn’t: the property’s cost basis, for capital-gains purposes, generally resets to its fair market value on the date the owner died. That reset, known as the step-up in basis, is why an heir who sells…

Workers who switch jobs several times over a career often leave behind a 401(k) or pension benefit at a former employer, sometimes without ever rolling it over or collecting it. Tracking down that money later has traditionally meant hunting down a company that may have merged, changed names, or gone out of business entirely, with…

Retirees who forget, miscalculate, or simply run out of time to take a required withdrawal from a traditional IRA or 401(k) now face a smaller tax bill than the rule used to impose. The Internal Revenue Service still treats a missed or short required minimum distribution as a real compliance failure, but the excise tax…

A homeowner who wants a house to reach an heir without a lawyer, a court filing, or a probate case can often skip all three with a transfer-on-death deed. The document lets an owner name a beneficiary who inherits the property automatically at death, while the owner keeps full ownership and control of the house…