秋霞66手机版-When it comes to your money, be careful who you listen to. Taking advice from an uninformed person can cost you dearly.
秋霞66手机版-For example, I received this question from a reader recently:
2019香蕉国偷产拍视频-“I am 60 years old. A friend told me I could use 401(k) or IRA money to pay off my mortgage without being taxed. They told me I would be taxed later, if I sell the home. Is this true? Can you tell me whether I can use retirement account funds to pay off a mortgage, or even pay down a mortgage, without incurring income taxes for the withdrawal?”
超级人碰人摸大公鸡免费视频-I knew the answer to the question, but just to be sure, I checked with the IRS and several certified public accountants who are members of the American Institute of CPAs’ Personal Financial Planning Executive Committee.
超级人碰人摸大公鸡免费视频-In case you aren’t sure, with a traditional 401(k) you make contributions on a pretax basis. Income taxes are then due on your contributions and earnings when you take a distribution. There is a 10 percent penalty if you take out the money too soon — before you reach age 59½.
99re久久热最新地址一-Depending on your income, contributions to a traditional IRA may be deductible from your taxable income. As a result, you also don’t pay income taxes until you withdraw the money. With a Roth 401(k), your contributions are made after taxes, so there are no income taxes due when you withdraw your money.
2019香蕉国偷产拍视频-So, about that possible tax loophole. Here’s what Eric Smith, a spokesman for the IRS, had to say about using tax-advantaged money to pay off a mortgage.
超级人碰人摸大公鸡免费视频-“I can’t think of any situation where that might be the case, especially for regular 401(k)s and traditional IRAs,” Smith said. “There are relief provisions for the 10 percent additional tax, but because she indicates she’s beyond the age 59.5 threshold, that wouldn’t be a problem anyway. Of course, the situation is quite different for distributions from a Roth IRA or Roth 401(k), but even then, there wouldn’t be anything special about using the distribution to pay off a mortgage.”
99re久久热最新地址一-As for the CPAs, here’s what they said.
99re久久热最新地址一-Julie Welch, a CPA based in Leawood, Kan., and a member of the AICPA who specializes in personal financial planning, said: “That advice is incorrect. While you would not incur a penalty for early distribution of the funds from an IRA or 401(k) since you are over age 59½, any distributions you take and use to pay off a mortgage would be income to you and subject to tax. If you already withdrew the money from your IRA, you generally have 60 days to put the money back into an IRA without being taxed on the withdrawal — as long as you have not used this rollover treatment during the previous 365 days.”
偷偷要费观看视频在 线-Michael Landsberg, a CPA based in Atlanta who also specializes in personal financial planning, said: “I’m not familiar with any rule that specifically defers taxation of retirement account withdrawals when used for paying off a mortgage. There is a special provision for first-time home buyers under age 59.5 to use IRA money and avoid the 10 percent early withdrawal penalty, but that doesn’t apply here. Using retirement account funds to pay off (or pay down) a mortgage balance depends on personal facts and circumstances. One potentially compelling reason would be a homeowner who simply wants to be debt-free while in retirement. Another more in-depth scenario would be a homeowner who’s not only in a low income tax bracket but will also be taking the standard deduction each year. If that person is paying interest on a 4.5 percent mortgage without receiving any direct tax benefits, then it could certainly make sense to withdraw money from an IRA and pay off the mortgage. However, the withdrawal will be taxed as ordinary income, so that would need to be considered as part of the analysis. Generally speaking, though, keeping retirement money intact for later in life while enjoying tax-deferred growth is a prudent strategy.”
99re久久热最新地址一-Dave Cherill, a CPA based in New York, said: “Taking funds from retirement assets to pay down or eliminate a mortgage may make sense from a cash flow perspective for taxpayers on a monthly basis, especially during the early years of a mortgage when higher interest amounts would otherwise need to be paid. But people often overlook the income tax impact of taking a distribution since 401(k) assets are taxed at ordinary rates. You can’t avoid (or delay) the tax impact once the distribution is taken and the funds are used."
偷偷要费观看视频在 线-I know it’s a painful tax bill to pay when it comes time to withdraw money from your retirement account. But be sure to consult a professional before taking advice off the street.
偷偷要费观看视频在 线-Your Thoughts
2019香蕉国偷产拍视频-Do you have a plan to pay off your mortgage before you retire? Send your comments to firstname.lastname@example.org. Please include your name, city and state. In the subject line put “401(k) Taxes."
秋霞66手机版-Retirement Rants and Raves
偷偷要费观看视频在 线-I’m interested in your experiences or concerns about retirement or aging. What do you like about retirement? What came as a surprise?
2019香蕉国偷产拍视频-If you haven’t retired yet, what concerns you financially?
秋霞66手机版-You can rant or rave. This space is yours. It’s a chance for you to express what’s on your mind. Send your comments to email@example.com. Please include your name, city and state. In the subject line put “Retirement Rants and Raves.”
秋霞66手机版-Last week’s newsletter focused on a question about retirement assets and whether the Federal Deposit Insurance Corp. (FDIC) insures the money.
超级人碰人摸大公鸡免费视频-Read: Your retirement money may not be as safe as you think
秋霞66手机版-It’s important to understand that the FDIC insures deposits only such as insured money market accounts and certificates of deposit (CDs). It does not insure securities, mutual funds or similar types of investments that banks and thrift institutions may offer.
2019香蕉国偷产拍视频-I asked readers if they understood what protections there are for their investment assets.
秋霞66手机版-Karen of Burke, Va., wrote, “I received conflicting information regarding my credit union accounts and how much of my money is protected. Are the examples you gave for FDIC insured accounts applicable to an NCUA credit union?”
超级人碰人摸大公鸡免费视频-The National Credit Union Administration is an independent agency that administers the National Credit Union Share Insurance Fund (NCUSIF), which insures credit union members’ deposits in federally insured credit unions up to $250,000.
99re久久热最新地址一-To find out how much of your money is insured, use the NCUA Share Insurance Estimator to calculate your coverage. You may also find it helpful to watch NCUA’s YouTube video for an overview of how much of your money is insured.
超级人碰人摸大公鸡免费视频-NCUA does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities or municipal securities, even if these investment or insurance products are sold at a federally insured credit union.
2019香蕉国偷产拍视频-Nancy Winchester of Maryland said she recently consolidated her retirement accounts at one financial services company.
偷偷要费观看视频在 线-“But I really struggled with whether all the money should be with one firm,” she wrote. “I did this because it was just simpler for me to track my assets if they were in one place. But now I'm feeling worried.”
超级人碰人摸大公鸡免费视频-Beth from Florida is also concerned about her retirement funds. “It’s not much, but it’s $360,000 in my 401(k). I have just retired and now I’m freaking out that it could disappear.”
2019香蕉国偷产拍视频-It’s important to understand that your investments are not protected against market losses. That’s the risk you take. However, if your brokerage firm fails, the Securities Investor Protection Corp. (SIPC) may step in to protect investors against the loss of their cash and securities such as stocks and bonds held by a SIPC-member brokerage firm.
偷偷要费观看视频在 线-How much protection do you have? SIPC answered some questions from concerned investors.
秋霞66手机版-Q: Do I need to split my money and put it at different investment companies to maximize insurance coverage through SIPC?
99re久久热最新地址一-A: SIPC protects against the loss of cash and securities — such as stocks and bonds — held by a customer at a financially troubled SIPC-member brokerage firm. The limit of SIPC protection is $500,000, which includes a $250,000 limit for cash. Most customers of failed brokerage firms are protected when assets are missing from customer accounts. In addition to the protection provided by SIPC, customers receive a pro rata share of any customer property that a trustee is able to recover for customers. The recovery per customer therefore may be, but is not always, substantially more than $500,000. If, taking into account the additional protection provided as a result of customers having multiple accounts held in different capacities, and the fact that the customer may receive more than just the SIPC advance, a customer may set up accounts at different brokerages and thereby increase his or her protection.
秋霞66手机版-Q: If I have have multiple accounts with different ownerships at one institution, how much of my money is protected?
2019香蕉国偷产拍视频-A: For purposes of SIPC protection, a joint account is treated as a single customer irrespective of the number of co-owners. For example, Joe and Mary are married and they have a joint brokerage account, which is separate from the individual accounts that they each have at the firm. An additional maximum of $500,000 of SIPC protection is available for the joint account. The individual accounts of Joe and Mary would each be separately protected. If securities were held in the three accounts at the brokerage (the two individual accounts and the joint account), the three would be eligible for a total of up to $1.5 million in protection. Please consult the SIPC website and click on “Investors with multiple accounts” for further information.
99re久久热最新地址一-Joint accounts with different co-owners (for example, one with a spouse/significant other and one with a child) are eligible for separate protection from SIPC. However, please note that accounts can’t be set up just to get more SIPC protection. For example, if Joe and Mary set up a joint account, but all the money comes from Joe and only Joe has the authority to act with respect to the account, that account would not be separately protected if Joe also has an account in his individual name.
99re久久热最新地址一-Q: And, what about Beth’s concerned about her $360,000 in her 401(k)?
超级人碰人摸大公鸡免费视频-A: If your employer’s 401(k) plan assets are held in a customer brokerage account at a SIPC-member brokerage firm, then cash and securities in that account may be eligible for protection by SIPC. Protection is limited to the amounts available with respect to a single account, however; i.e., an overall limit of $500,000, of which no more than $250,000 may be for cash. SIPC protection generally is not available separately for the individual participants in the 401(k) plan.
99re久久热最新地址一-Q: Have there been any major investment firms that failed?
99re久久热最新地址一-A: During the 2008 financial crisis, Lehman Brothers Inc. and Bernard L. Madoff Investment Securities both failed and were placed in liquidation under the SIPC statute. Customers with valid claims in the Lehman case recovered all their assets. In the Madoff case, customers have been satisfied up to 66 percent of their allowed claims as a result of recoveries made by the trustee in that case and SIPC advances. The Madoff case is still very active, with additional recoveries projected for customers. In 2011, MF Global also failed and was placed in SIPC liquidation. That liquidation was completed with a 100 percent recovery for customers with allowed claims.
秋霞66手机版-Read: The lessons we should have learned from Madoff
2019香蕉国偷产拍视频-Subscribe and stay informed
99re久久热最新地址一-If you’re viewing this post online, sign up to automatically receive Michelle Singletary’s newsletters right into your email box: “Your Retirement” on Mondays and “Personal Finance” on Thursdays.
2019香蕉国偷产拍视频-Read and share Michelle Singletary’s Color of Money Column on Wednesdays and Sundays in The Washington Post. You may also see the column in your local newspaper.