Social issues — ✅ خرید وی پی ان ❇ ip ثایت vPn آی پی اختصاصی ◐

اکتبر 1, 2022

How Much Should You Expect To Spend on Medical Expenses in Retirement?

If you’re saving for retirement, you’re likely building up a nest egg that will cover the food, housing, transportation and medical expenses you’ll have in your golden years. You’re probably also stashing away at least 15% of your paycheck and anticipating a savings withdrawal rate of no more than 4%. While you may be doing all the right things when it comes to saving for retirement, it might be that you simply haven’t stowed away enough money. A recent report by the Center for Retirement Research at Boston College found that a significant portion of retirees’ savings and Social Security benefits went towards covering their medical expenses.Below, Select takes a closer look at what percentage of retirees’ income is spent on medical expenses and how you can better prepare to handle these costs in retirement.Subscribe to the Select Newsletter!Our best selections in your inbox. Shopping recommendations that help upgrade your life, delivered weekly. Sign-up here.The cost of medical expenses in retirementIn the brief, researchers used data from the 2018 Health and Retirement Study to see how much of retirees’ Social Security benefits and total retirement income was going toward medical-related expenses such as Medicare premiums, prescription drugs, surgeries and doctor visits. And while it may seem like having Medicare means paying lower medical costs, this was not the case.The study found that, in 2018, 12% of the median retiree’s total retirement income went toward medical expenses. For the median retiree, 25% of their Social Security benefits went towards medical costs. In total, the median retiree spent $4,311 on medical expenses, with most of that money going toward Medicare premiums.In 2022, the monthly premium for Medicare Part B, which is medical insurance, was $170.10.”With out-of-pocket health expenditures eating away at retirement income and Part B premiums on the rise, it is understandable why many retirees likely feel that making ends meet is difficult,” the researchers noted.It also turns out that people preparing for retirement aren’t great at forecasting how much they’ll spend on medical expenses later in life, as another recent study by the Center for Retirement Research at Boston College found.According to the 2022 Fidelity Retiree Health Care Cost Estimate, the average retired couple at age 65 can expect to spend around $315,000 on health care expenses in retirement.How to prepare for medical expenses in retirementSo, if you’re planning for retirement, how can you best prepare for these medical costs ahead of time? There are a number of ways to use tax-advantaged accounts and insurance products to help cover healthcare costs.401(k)s and IRAsFirst off, you should focus on maximizing tax-advantaged investment accounts such as your employer-sponsored 401(k) or a traditional or Roth IRA. With a 401(k) and traditional IRA, the money will not be taxed until you withdraw it in retirement. With a Roth IRA, money is taxed upfront which allows your investments to grow tax-free over time.If your employer offers a 401(k) match, take advantage of that since it’s essentially free money. If you’re eligible for a traditional or Roth IRA, consider opening one with Charles Schwab, Fidelity Investments, Vanguard or Betterment. Select ranked these companies as offering the best IRAs based on factors such as the variety of investment options, low fees and ease of use.Fidelity Investments

Minimum deposit and balanceMinimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum to open a Fidelity Go account, but minimum $10 balance for robo-advisor to start investing. Minimum $25,000 balance for Fidelity Personalized Planning & Advice
FeesFees may vary depending on the investment vehicle selected. Zero commission fees for stock, ETF, options trades and some mutual funds; zero transaction fees for over 3,400 mutual funds; $0.65 per options contract. Fidelity Go is free for balances under $10,000 (after, $3 per month for balances between $10,000 and $49,999; 0.35% for balances over $50,000). Fidelity Personalized Planning & Advice has a 0.50% advisory fee
Bonus
Investment vehiclesRobo-advisor: Fidelity Go® and Fidelity^® Personalized Planning & Advice IRA: Fidelity Investments Traditional, Roth and Rollover IRAs Brokerage and trading: Fidelity Investments Trading Other: Fidelity Investments 529 College Savings; Fidelity HSA^®
Investment optionsStocks, bonds, ETFs, mutual funds, CDs, options and fractional shares
Educational resourcesExtensive tools and industry-leading, in-depth research from 20-plus independent providers

BettermentOn Betterment’s secure site

Minimum deposit and balanceMinimum deposit and balance requirements may vary depending on the investment vehicle selected. For Betterment Digital Investing, $0 minimum balance; Premium Investing requires a $100,000 minimum balance
FeesFees may vary depending on the investment vehicle selected. For Betterment Digital Investing, 0.25% of your fund balance as an annual account fee; Premium Investing has a 0.40% annual fee
BonusUp to one year of free management service with a qualifying deposit within 45 days of signup. Valid only for new individual investment accounts with Betterment LLC
Investment vehicles
Investment optionsStocks, bonds, ETFs and cash
Educational resourcesBetterment RetireGuide™ helps users plan for retirement

Health Saving AccountsAdditionally, if you’re enrolled in a high-deductible healthcare plan, you should think about contributing to a Health Savings Account, a tax-advantaged investment account that can be used to pay for medical expenses. For 2022, the yearly contribution limit is $3,650 for single-earners and $7,300 for families. Those who are age 55 and older are eligible for catch-up contributions of an additional $1,000 per year. Note that if you don’t use the money you saved in a given year, the funds will be rolled over to the next year.Generally, Health Savings Accounts offer three major tax advantages. Contributions are tax-deductible which means they will reduce your overall taxable income. You also won’t pay taxes on your contributions.You can then withdraw HSA funds for qualified medical expenses such as co-pays, co-insurance, prescription drugs and menstrual products. Once you hit age 65, you can use the funds from your HSA to take care of any expenses, not just out-of-pocket medical costs.Additionally, if you choose to invest your funds, you won’t have to pay taxes on your earnings.Similar to a traditional or Roth IRA, you can invest the funds in your HSA into exchange-traded funds, mutual funds and stocks. You’ll want to look into the rules of your Health Savings Account first, as some of them have a minimum amount requirement that must be reached before you can start investing your funds.Long-term care insurance and MedigapIf the out-of-pocket costs of healthcare in retirement are still high even after Medicare coverage, you might opt for supplemental Medicare insurance which is known as Medigap.Medigap is provided through private insurance companies and can be used to fund Medicare co-pays, deductibles and coinsurance. Individuals must be age 65 or older and need to be enrolled in Medicare Part A (hospital services) and Part B (medical insurance). With Medigap, individuals pay a premium for the supplemental insurance in addition to any premiums they must pay for Medicare Part A and B.Another type of insurance you may look into is long-term care insurance which is used to fund nursing home stays, assisted living and adult daycare expenses. Since Medicare and Medigap do not generally cover these expenses, it may be wise to start shopping for a long-term care insurance policy starting in your 40s or 50s. Assisted livings and nursing homes can be incredibly costly — according to a 2021 Cost of Care Survey by Genworth, the average cost for a semi-private room in a nursing home was $7,908 per month while a private room costs $9,034 per monthWith a long-term care insurance policy, you pay a premium each month to a private insurance company. If you ever need the covered services offered through the plan, you then submit claims to the company. Bottom lineWhen saving for retirement, you should be prepared for a significant amount of your retirement income to be allocated toward medical bills —12% of the median retiree’s retirement income had gone toward covering medical expenses. You can save for retirement by taking advantage of the variety of different tax-advantaged investment accounts that exist such as 401(k)s, traditional and Roth IRAs and Health Savings Accounts. Additionally, you should consider taking out Medigap or long-term care insurance if you anticipate substantial healthcare expenses in retirement.Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party. .

سپتامبر 29, 2022

Some Medicare beneficiaries could face 2023 Part B premiums of $560.50

Shapecharge | E+ | Getty ImagesIf you’re a higher-income Medicare beneficiary, you may be paying less in extra premium charges in 2023 than you were this year.So-called income-related adjustment amounts, or IRMAAs, which are based on your tax return from two years earlier, kick in next year at $97,000 for single tax filers and $194,000 for joint filers (based on their 2020 return), up from $91,000 and $182,000, respectively.Additionally, with the standard Part B (outpatient care coverage) premium dropping by 3% next year to $164.90 from $170.10 in 2022, the IRMAAs also are less costly.The surcharges apply to both Part B and Part D (prescription drug coverage) premiums and affect about 7% of Medicare’s 64.3 million beneficiaries. The higher your income, the higher the charge. (See charts below.)Whether you have to pay the surcharge is based on your modified adjusted gross income as defined by the Medicare program: your adjusted gross income plus tax-exempt interest income.”You only have to go $1 over that [lowest] breakpoint and you’re subject to IRMAAs,” said certified financial planner Barbara O’Neill, owner and CEO of Money Talk, a financial education company. “If you’re close to that or close to going to a higher tier, you’ve really got to be proactive,” O’Neill said.In other words, there are some strategies and planning techniques that can help you avoid or minimize those IRMAAs. Here are four to consider:1. Focus on income streams under your controlWhile some income in retirement is generally set — i.e., Social Security and/or a pension — the key to avoiding IRMAAs is to focus on what income streams you can control, said CFP Judson Meinhart, senior financial advisor and manager of financial planning for Parsec Financial in Winston-Salem, North Carolina.”The key to keeping [your income] below the IRMAA brackets is planning ahead to know where your income is coming from,” Meinhart said.More from FA Playbook:Here’s a look at other stories impacting the financial advisor business.Be aware that the IRMAA determination is typically based on your tax return from two years earlier. If your income has dropped since then, you can appeal the IRMAA decision using Form SSA-44 and providing proof that you’ve experienced a “life-changing event” such as retirement, death of a spouse or divorce.2. Consider Roth IRA conversionsOne way to keep your taxable income down is to avoid having all of your nest egg in retirement accounts whose distributions are taxed as ordinary income, such as a traditional IRA or 401(k) plan. So whether you’ve signed up for Medicare yet or not, it may be worth converting taxable assets to a Roth IRA.Roth contributions are taxed upfront, but qualified withdrawals are tax-free. This means that while you would pay taxes now on the amount converted, the Roth account would provide tax-free income down the road — as long as you are at least age 59½ and the account has been open for more than five years, or you meet an exclusion.”You pay a little more now to avoid higher tax brackets or IRMAA brackets later on,” Meinhart said.It also helps that Roth IRAs do not have required minimum distributions, or RMDs, in the owner’s lifetime. RMDs are amounts that must be withdrawn from traditional IRAs, as well as both traditional and Roth 401(k) accounts, once you reach age 72.When RMDs from traditional accounts kick in, your taxable income could be pushed up enough that you become subject to IRMAAs, or to a higher amount if you already were paying the surcharge.”A lot of people get into trouble by taking no money out of their 401(k) plan or IRA, and then they have their first RMD and it puts them in one of those IRMAA brackets,” Meinhart said.3. Keep an eye on capital gainsIf you have assets that could generate a taxable profit when sold — i.e., investments in a brokerage account — it may be worth evaluating how well you can manage those capital gains. While you may be able to time the sale of, say, an appreciated stock to control when and how you would be taxed, some mutual funds have a way of surprising investors at the end of the year with capital gains and dividends, both of which feed into the IRMAA calculation. “With mutual funds, you don’t have a whole lot of control because they have to pass the gains on to you,” said O’Neill, of Money Talk. “The problem is you don’t know how big those distributions are going to be until very late in the tax year.”Depending on the specifics of your situation, it may be worth considering holding exchange-traded funds instead of mutual funds in your brokerage account due to their tax efficiency, experts say.For investments whose sale you can time, it’s also important to remember the benefits of tax-loss harvesting as a way to minimize your taxable income.That is, if you end up selling assets at a loss, you can use those losses to offset or reduce any gains you realized. Generally speaking, if the losses exceed the profit, you can use up to $3,000 per year against your regular income and carry forward the unused amount to future tax years.4. Tap your philanthropic sideIf you’re at least age 70½, a qualified charitable contribution, or QCD, is another way to keep your taxable income down. The contribution goes directly from your IRA to a qualified charity and is excluded from your income.”It’s one of the few ways you can really get money out of an IRA completely tax-free,” Meinhart said. “And when you’re 72, that charitable distribution can help offset your required minimum distributions.”The maximum you can transfer is $100,000 annually; if you’re married, each spouse can transfer $100,000. .

سپتامبر 24, 2022

Best Renters Insurance Companies Of 2022

If you rent your home or are moving soon, you should seriously consider getting renters insurance. Depending on your lease agreement, it might even be required.Renters insurance is a type of insurance policy that protects your personal belongings (like your computer) in the event that it is lost, stolen or damaged due to an incident in your home — such as a fire or sewage backup. You can also get extra protection for certain valuables like professional cameras, jewelry, fine art and more.Moreover, renters insurance can also protect you in the event that a visitor gets hurt in your apartment or condo, since you can sometimes be liable for this, by covering their medical expenses so you don’t have to take on that huge out-of-pocket cost.If something does happen to your personal property or someone gets hurt in your apartment and you get hit with their medical costs, you’ll need to file an insurance claim and submit any necessary documentation (i.e., photos, receipts, bills, etc.). You’ll pay your deductible and the insurance company will cover the rest.Hopefully, you won’t have to file a claim, but if you do, many insurance companies try to make the process as simple as possible so you can get paid with ease.If you aren’t sure which renters insurance company would be best for you, Select rounded up some of the best contenders to make the choice easier. We evaluated insurance companies based on monthly cost, policy coverage and opportunities to save, among others (see our methodology below).Best renters insurance companiesFAQsSubscribe to the Select Newsletter!Our best selections in your inbox. Shopping recommendations that help upgrade your life, delivered weekly. Sign-up here.Best for fast, easy coverageLemonade Renter’s Insurance

CostStarts at $5/month; premium depends on the coverage amount you choose
Maximum coverage
App available
Policy highlightsPolicy covers personal property damage caused by fire, vandalism, theft, and more; covers damage you accidentally cause others
Does not coverNatural disasters, flooding, power outages, your roommate’s belongings, pest damage

Pros

Easy sign-up process
Affordable monthly cost
Make claims through the app
Ability to easily switch over from a different insurer

Cons

Available in only 29 states

Who’s this for? Lemonade is an easy-to-use insurance platform to get coverage in a pinch. Users can sign up for a policy in just minutes — 90 seconds, according to Lemonade’s website — and get paid for a claim in just three minutes. You can use the platform to get homeowners, car, pet and term life insurance, but as far as renter’s insurance goes, the platform offers affordable coverage starting at just $5 per month. Your monthly cost will depend on how much coverage you need.I personally use renter’s insurance from Lemonade and since my building requires me to sign up for a minimum of $100,000 in personal liability coverage, my monthly cost is just under $10.You can also select some extra coverage for items that aren’t covered under a standard policy, like fine art, jewelry, watches, expensive cameras and more. And if you use the Lemonade app, you can easily adjust your coverage, add your spouse to your coverage, cancel your policy and file a claim right from there.Best for military members and veteransUSAA Renter’s Insurance

CostStarts at $10/month; premium depends on the coverage amount you choose
Maximum coverage
App available
Policy highlightsPolicy covers personal property damage caused by fire, vandalism, building collapse, theft, and more; standard coverage includes flood protection and no extra cost for earthquake protection; overseas insurance allows personal property to be protected if you are deployed or move abroad
Does not coverBuilding and roof damage, water leak damage, damage caused by insects or pets, vehicle damage or theft, your roommate’s personal property

Pros

Includes flood damage in standard coverage
Discount of up to 28% on a specialized renters policy if you live on base, in barracks or military dorms
Option to get insurance for your child if they’re moving out or living in a dorm
10% discount applied if you bundle renter’s insurance with auto insurance
Easily use the USAA mobile app to file a claim

Cons

Does not cover damage caused by pets or insects, water leak damage, or building and roof damage

Who’s this for? USAA renter’s insurance coverage is available nationwide to anyone who has a military affiliation. Other insurers don’t typically provide any protection for property damaged as a result of flooding but USAA does.Coverage can also be used for damage from explosions, riots, artificially generated electrical current, aircraft, accidental tearing, cracking and burning.USAA also offers extra coverage for protecting high-value items, like jewelry, a camera, musical instruments and fine art. The offer is known as Valuable Personal Property (VPP) insurance and pricing starts at $2 per month — you won’t have to pay a deductible if you file a claim, though, and if you bundle VPP insurance with renter’s insurance, you may qualify for savings.Even if VPP insurance doesn’t suit your needs, there are still other ways to score a discount with USAA insurance. If you bundle renter’s insurance with auto insurance, you could receive a discount of up to 10%. Policyholders can also earn discounts for tacking on home security monitoring as a service and remaining claim-free.Best for discountsProgressive Renters Insurance

CostStarts at under $1 a day; premium depends on the coverage amount you choose
Maximum coverage
App available
Policy highlightsPolicy covers personal property damage or loss, loss of use of your rental, accidental harm caused to another person or damage to their property, injury to another person that occurs in your rental space
Does not coverHigh-value items like jewelry; additional coverage would be needed for such items

Pros

Multi-policy discount for bundling renters insurance with other insurances (auto, boat, motorcycle, etc.)
Discount for getting a quote at least three days before your policy starts
Policy discount for opting in to receive insurance documents via email
Discount for paying your policy upfront and in-full
Discount for those living in a secured/gated community that requires key or remote access

Cons

Coverage for water backup and damage must be added onto your policy

Who’s this for? Progressive is a household name in insurance, which can be appealing to those who want to go with a well-known brand. This insurer offers a host of ways for policyholders to save as much money as possible.For starters, you can receive the multi-policy discount for bundling renters insurance with other insurances. This includes motorcycle, auto, boat insurance and more. A discount for bundling renters insurance with other policies is typically standard for the industry. Progressive also offers a discount for getting a quote at least three days before your policy starts, which means planning ahead and doing your research in advance can literally pay off.Policyholders can get another discount for opting to receive their documentation via email, though, the exact discount amount is not disclosed. You may also save some money if you pay your policy in full and upfront or if you live in a gated/secured community.Progressive is available nationwide, but you’ll want to double-check that you’re eligible for any of the discount offers based on the state you live in.Best for wider coverageNationwide Renters Insurance

CostStarts at $20/month; premium depends on the coverage amount you choose
Maximum coverage
App available
Policy highlightsPolicy covers personal property damage or loss, loss of use, personal liability, medical payments to others, building additions and alterations, credit card coverage for unauthorized transactions
Does not coverHigh-value items, water backup, earthquakes, theft of items stored in motor vehicle, trailer, or watercraft; additional coverage can be purchased for these instances

Pros

Coverage includes protection for unauthorized credit card transactions, forged checks and counterfeit money
Multi-policy discounts available
Discount available for having a smoke detector, fire alarm, or burglar alarm in your home
Ability to qualify for a better rate if you don’t make any claims

Cons

Minimum cost is a bit pricier compared to that of other insurance companies

Who’s this for? Like Progressive, Nationwide is another well-established insurance company. What stands out about this insurer is that policy coverage can apply to other unique events or mishaps, like unauthorized purchases being made to your credit card.With a Nationwide policy, you can also be paid for any damages to additions, alterations, fixtures, improvements or installations that you make to your home.Many of the policy discounts offered by Nationwide are standard — a discount for bundling different policies and a better rate for keeping your policy claim-free.FAQsHow does renters insurance work?To sign up for renters insurance, choose your desired insurance company and enroll for coverage. You’ll need to choose a certain coverage amount, which will depend on what kinds of liabilities and items you’re looking to protect. For instance, if you’re looking to cover personal property, you might opt for $30,000 in coverage. If you’re protecting your personal liability, you might go for $100,000 in coverage. This is the maximum amount you’d be reimbursed in the event of an incident.You’ll pay a monthly premium for the policy, which can cost just a few dollars but will depend on the company’s rates. If you never have to file an insurance claim, your monthly premium will essentially just be another monthly “bill” that you pay.If you do need to file a claim, though, you’ll typically pay an upfront deductible. A deductible is a portion of the cost to replace your items that you must pay before your insurance kicks in and covers the rest. Usually, the larger your monthly premium, the smaller your deductible will be.So while insurance doesn’t necessarily make it totally “free” to replace lost or damaged items or pay for personal liabilities, it can significantly reduce your out-of-pocket cost.What does renters insurance cover?Renters insurance usually covers your stolen or damaged personal property, bodily injuries that a visitor sustains while on your rented property, water backup, vandalism and damage from fires.Renters insurance can also cover high-value items like jewelry and fine art, but you’ll usually need to tack on extra coverage, typically at a small additional cost. Renters insurance usually doesn’t encompass damage from floods or power outages. It’s also important to note that renters insurance protects the policyholder, meaning, your roommate and their belongings are not covered under your insurance unless they are added to your policy.What’s the difference between renters insurance and homeowners insurance?Renters insurance is meant to provide coverage for belongings, while homeowners insurance provides coverage for the actual building you live in and associated structures, like a garage or shed. Homeowners insurance is also usually required when you buy your property but if you’re a renter, you may not always be obligated to take on a renters insurance policy.How do you file a claim?The process for filing an insurance claim may vary slightly from one company to the next. Typically, you’ll need to provide photos of the damage, receipts and any other documentation or proof that is related to the claim you’re filing. This will help the company assess the damages.Once your claim is approved, the timeline for payout will also vary from company to company.Bottom lineThough it can often feel like another bill that you have to pay, renters insurance can really come in handy if your valuables were to be stolen or damaged by circumstances beyond your control. Instead of having to foot the entire cost of replacing those items, the insurance company will reimburse you once you pay your deductible amount. Hopefully, you never need to file a claim but renters insurance can always provide that peace of mind of knowing that you’re covered if anything were to happen.Our methodologyTo determine which renters insurance companies are the best, Select analyzed dozens of U.S. insurance companies that come with policies to suit an array of needs.When narrowing down and ranking the best renters insurance companies, we focused on the following features:

Cost: While monthly premiums can depend on the amount of coverage an individual needs, location, the value of your possessions and other variables, some insurance options offer policies with lower monthly starting costs.
Policy coverage: Standard policies tend to include coverage for personal property loss or damage, personal liability and medical payments to others. Some companies may also include water damage, water backup and high-value items as add-ons for extra coverage.
Maximum coverage amount: It is common for insurance companies to provide different coverage amounts for different concerns. Personal liability coverage can be as much as $1,000,000, while personal property coverage can go as high as $100,000 for standard companies. The maximum amounts vary from company to company. We have noted maximum coverage wherever possible.
Renters discounts: Insurance companies typically allow policyholders to earn a small discount for signing on to bundle renters insurance with other policies such as auto insurance, RV insurance, boat insurance and more. Some companies may also offer an additional discount for having certain safety features in one’s home, including smoke detectors and burglar alarms. A rate reduction may be applied for those whose policy remains claim-free for a certain amount of time.
Availability: For some insurance companies, policy availability will depend on the city or state, as not all companies offer nationwide policies and discounts for policies.
Claim filing: Many insurance companies allow policyholders to file a claim via their app or through their online accounts. In loss of use cases, policyholders may be required to retain receipts to submit alongside their claim.
Streamlined signup process: We considered whether insurance companies offered a convenient, fast online signup process.
Customer support: Every insurance company on our list provides customer service available via telephone, email, secure online messaging and/or through an app. We also opted for lenders with an online resource hub or advice center to help you educate yourself about renters insurance policies and claims.

After reviewing the above features, we sorted our recommendations by best for fast, easy coverage, best for wider coverage, best for discounts and best for military members and Veterans.Note that the premiums and policy structures advertised for renters insurance are subject to fluctuate in accordance with the company’s policies.Catch up on Select’s in-depth coverage of personal finance, tech and tools, wellness and more, and follow us on Facebook, Instagram and Twitter to stay up to date.Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party. .

جولای 16, 2022

Strategies can help you avoid paying extra for Medicare premiums

Morsa Images | DigitalVision | Getty ImagesFor some retirees, there’s an extra cost associated with Medicare premiums that can ambush their household budgets.Most Medicare enrollees pay the standard premium amounts for Part B (outpatient care) and Part D (prescription drugs). Yet an estimated 7% of Medicare’s 64.3 million beneficiaries end up paying extra because their income is high enough for income-related monthly adjustment amounts, or IRMAAs, to kick in, according to the Centers for Medicare & Medicaid Services.Whether you have to pay the surcharge is based on your modified adjusted gross income as defined by the Medicare program: your adjusted gross income plus tax-exempt interest income. For 2022, IRMAAs kick in when that amount is more than $91,000 for individuals or $182,000 for married couples filing joint tax returns. The higher your income, the larger the surcharge is.”You only have to go $1 over that [lowest] breakpoint and you’re subject to IRMAAs,” said certified financial planner Barbara O’Neill, owner and CEO of Money Talk, a financial education company. “If you’re close to that or close to going to a higher tier, you’ve really got to be proactive,” O’Neill said.In other words, there are some strategies and planning techniques that can help you avoid or minimize those IRMAAs. Here are four to consider:1. Focus on what you can control2. Consider converting to Roth IRA accountsOne way to keep your taxable income down is to avoid having all of your nest egg in retirement accounts whose distributions are taxed as ordinary income, such as a traditional IRA or 401(k). So whether you’ve signed up for Medicare yet or not, it may be worth converting taxable assets to a Roth IRA.Roth contributions are taxed upfront, but qualified withdrawals are tax-free. This means that while you would pay taxes now on the amount converted, the Roth account would provide tax-free income down the road — as long as you are at least age 59½ and the account has been open for more than five years, or you meet an exclusion.”You pay a little more now to avoid higher tax brackets or IRMAA brackets later on,” Meinhart said.It also helps that Roth IRAs do not have required minimum distributions, or RMDs, in the owner’s lifetime. RMDs are amounts that must be withdrawn from traditional IRAs as well as both traditional and Roth 401(k)s once you reach age 72.When RMDs from traditional accounts kick in, your taxable income could be pushed up enough that you become subject to IRMAAs, or to a higher amount if you already were paying the surcharge.”A lot of people get into trouble by taking no money out of their 401(k) or IRA, and then they have their first RMD and it puts them in one of those IRMAA brackets,” Meinhart said.3. Keep an eye on capital gainsIf you have assets that could generate a taxable profit when sold — i.e., investments in a brokerage account — it may be worth evaluating how well you can manage those capital gains. While you may be able to time the sale of, say, an appreciated stock to control when and how you would be taxed, some mutual funds have a way of surprising investors at the end of the year with capital gains and dividends, both of which feed into the IRMAA calculation. “With mutual funds, you don’t have a whole lot of control because they have to pass the gains on to you,” said O’Neill, of Money Talk. “The problem is you don’t know how big those distributions are going to be until very late in the tax year.”Depending on the specifics of your situation, it may be worth considering holding exchange-traded funds instead of mutual funds in your brokerage account due to their tax efficiency, experts say.For investments whose sale you can time, it’s also important to remember the benefits of tax-loss harvesting as a way to minimize your taxable income.That is, if you end up selling assets at a loss, you can use those losses to offset or reduce any gains you realized. Generally speaking, if the losses exceed the profit, you can use up to $3,000 per year against your regular income and carry forward the unused amount to future tax years.4. Tap your philanthropic sideIf you’re at least age 70½, a qualified charitable contribution, or QCD, is another way to keep your taxable income down. The contribution goes directly from your IRA to a qualified charity and is excluded from your income.”It’s one of the few ways you can really get money out of an IRA completely tax free,” Meinhart said. “And when you’re 72, that charitable distribution can help offset your required minimum distributions.”The maximum you can transfer is $100,000 annually; if you’re married, each spouse can transfer $100,000. .

می 28, 2022

Choice between pre-tax and Roth 401(k) plans trickier than you think

Prathanchorruangsak | Istock | Getty ImagesWhether you’re a current employee or changing jobs, you may need to choose between pre-tax and Roth 401(k) contributions, and it may be trickier than you expect.Here’s the difference: Pre-tax 401(k) deposits reduce your adjusted gross income, and the money grows tax-deferred, meaning you’ll pay levies on withdrawals. By contrast, Roth 401(k) contributions don’t provide an upfront write-off, but earnings are tax-free.However, there may be other tax trade-offs, so you’ll need to weigh the pros and cons before diverting funds, financial experts say.More from Personal Finance:
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How to beat back rising prices with Memorial Day dealsRoughly 86% of 401(k) plans offered a Roth account in 2020, up from 75% in 2019, according to the Plan Sponsor Council of America.”In general, the goal is to take deductions at a higher tax rate and distributions at a lower one,” said certified financial planner Ken Waltzer, co-founder and managing partner of KCS Wealth Advisory in Los Angeles. If you plan on more income or higher taxes in retirement, tax-free withdrawals from Roth contributions may make sense, and tax-deferred contributions may be better if you expect lower earnings and levies.But that’s not always a winning strategy, according to Michelle Gessner, a Houston-based CFP and founder of Gessner Wealth Strategies.”Investors are quick to discard the idea of making Roth contributions if they are in a high tax bracket because they want the deduction that comes with a regular 401(k) contribution,” she said.However, the upfront write-off may not be worth it if you worry about the consequences of taxable required minimum distributions, she said. Social Security and Medicare costsWhen someone withdraws tax-deferred money from a 401(k), it boosts their income, which may trigger levies on Social Security and hike Medicare premiums. The formulas for Social Security taxes, Medicare Part B and Medicare Part D use so-called modified adjusted gross income, or MAGI.If half of your Social Security payments plus MAGI is more than $34,000 ($44,000 for a joint return), up to 85% of those benefits may be taxable.However, the bigger issue for retirees above certain income levels may be the surcharge for Medicare Part B, known as the Income Related Monthly Adjustment Amount, or IRMAA. While the base amount for Medicare Part B premiums is $170.10 for 2022, payments go up once income exceeds $91,000 ($182,000 for joint filers). The calculation uses MAGI from two years prior. Roth withdrawals, however, won’t show up on tax returns, said Gessner, meaning retirees don’t have to worry about these distributions causing Medicare premium increases.Diversify taxesSince no one can predict future tax rates, you may also consider creating a mix of pre-tax and after-tax funds from a diversification standpoint, experts say.”It is great when clients have both Roth and traditional retirement savings,” said Catherine Valega, a CFP and wealth consultant at Green Bee Advisory in Winchester, Massachusetts.If you have both pre-tax and after-tax funds, it may provide more options to craft an efficient retirement income plan, she said. .