Can my spouse continue contributing to an IRA and 403(b) after age 70.5?
May 25, 2012: 4:46 PM ETMy spouse will be 70.5 in 2013. She has an IRA and a 403(b) retirement plan at work. If she continues to work, can she continue to contribute to both the IRA and 403(b)? What is to be done about mandatory minimum withdrawals?
--Name withheld
The rules are quite different when it comes to an IRA versus a 403(b).
Let's start with the IRA. Here, the fact that your spouse will continue to work has no impact. Contributions to a traditional individual retirement account (deductible or non-deductible) are no longer permitted starting the year one turns 70.5. Likewise, regardless of work, 70.5 is the magic age when required minimum distributions (RMDs) must begin — the firstwithdrawal must take place no later than April 1st of the year following the year one turns age 70.5.
But there's one big exception: Should the IRA be a Roth IRA, then contributions can continue and withdrawals are not required. (Yep, that's one of the big selling points of the Roth.)
The 403(b) is a different story. Here, if your spouse keeps working, she should be able to continue to contribute to her plan (assuming she's currently eligible) and may not need to begin withdrawals. But she should confirm this with her employer, says Gil Charney of H&R Block's Tax Institute. While the IRS says employees can wait until retirement, it's ultimately up to employer as to whether employees must start RMDs after age 70.5. But there's a good chance that she can hold off on withdrawals until after the champagne has been poured at her retirement party.
-- Stephanie AuWerter
-
How do you know if mutual fund fees are fair?
How do you know if you're getting a fair shake on mutual fund costs? -- Name withheld
It takes a little legwork, but it's not like searching for the Holy Grail.
First, if you're concerned about costs, stick with no-load funds. These are funds in which shares are sold without a commission or sales charge. That zaps a potential expense right from the get-go.
Additionally, pay close attention to a fund's expense ratio. This MORE
May 23, 2012 5:05 AM ETPosted in: Investing -
Can we buy rental property in a SEP-IRA?
My wife and I are both self-employed and are looking at opening a simplified employee pension plan IRA to offset some of our taxes owed for 2011. We have been informed that we can invest up to $41,000 in a SEP-IRA. Is there a way to purchase a rental property in a SEP account? -- Robby Huttsell, Mount Juliet, Tenn.
In theory, yes, you can own rental property in a SEP-IRA. In MORE
May 22, 2012 5:05 AM ETPosted in: Real Estate, Retirement -
If I earn too much to keep contributing to my Roth, should I cash it out?
My husband and I set up Roth IRAs early in our careers, but quickly reached above the salary maximum, so we can't fund these accounts. We are now left with two accounts with high fees and low performance. Do we have any rollover opportunities into alternate account types that would allow us to continue to build the assets or are we better off taking the 10% penalty and just MORE
May 18, 2012 3:38 PM ETPosted in: Retirement -
Is there any reason for a high earner to submit a FAFSA form for financial aid?
I'll have college age children soon. Each of them has an equities account in their own names, given by their grandparents. I'm in the top 5% of wage earners, topping $200,000 per year. My wife doesn't work but we have been good savers--our 401K and other savings amount to more than $2 million. I started working on a FAFSA aid estimate and soon concluded that there is no way we're MORE
May 17, 2012 10:25 AM ETPosted in: Family Money -
Should I stop funding my roth?
After doing my taxes, I discovered that I owed again this year. I earn a salary of $90,000, I am single, and I do not own a home. Based on this, my deductions are limited. I contribute 15% of my salary to my 401(k), and I plan on updating that to18% this year and possibly trying to contribute the max by the end of the year. I have been contributing MORE
May 16, 2012 5:05 AM ETPosted in: Family Money -
What's the tax bite on gifting a home that's been used for business?
My wife has had a home-based business for the last 25 years and is now ready to retire. She has depreciated our home over that time to help offset income. The home will be paid for in five more years. At that time, I would like to deed the property to an LLC that my wife and I own for that purpose. We will then "gift" our ownership shares MORE
May 15, 2012 5:05 AM ETPosted in: Family Money, Real Estate -
Should we stick with our in-state 529 plan?
We'd like to start a college savings program for our three young children. Can you tell us what the highest performing and most cost-effective state 529 programs are right now? We live in Texas, but I've heard that the Texas 529 plan is poor performing. And is there a savings vehicle we should consider instead of the 529? –Cathy M., Dallas
In many states, you get a break on your state MORE
May 11, 2012 2:24 PM ETPosted in: Family Money -
Can we refinance without much home equity?
We have a second conventional mortgage on our primary (and only) home. When we purchased it, we used an 85-15-5 loan breakdown. We have since refinanced the primary mortgage, but are paying 8.4% on the second. Our loan-to-value ratio is too high to refinance the second loan and, since we are not facing a financial hardship, we are not eligible for a loan modification. What other options do we MORE
May 10, 2012 5:05 AM ETPosted in: Real Estate, Uncategorized -
Should I open a Traditional or Roth IRA?
If you're just out of school with a salary in the low 30s, is it better to open a traditional IRA or a Roth IRA? —John Coussa, Eastchester, N.Y.
Open a Roth. The big difference between the two is when you will pay taxes. With a Roth, you pay now: You fund it with after-tax earnings and withdraw money tax-free. With a traditional IRA, you pay later: Contributions are tax-deductible at your MORE
May 9, 2012 5:05 AM ETPosted in: Retirement
Got a question about your money? We want to hear it! Each week we're answering your questions on CNN, Headline News and CNNMoney.com.
-
Professional recruiter advises to constantly monitor your online footprint and to actively network on LinkedIn. Play -
Stand-up Economist Yoram Bauman compares getting credit cards to having babies. Play -
Middle-school students become adults for a day at JA Finance Park. where they balance a budget and learn how to manage their money. Play -
While you might be tempted to exit bonds, resist the urge and keep a diverse portfolio. Play
Tips for saving and spending smarter. SUBSCRIBE
Help DeskMore help for your career, your investments and your budget.
