Monday, March 28, 2016

Many Retirees Face April 1st Deadline to Take Required Retirement Plan Distributions

WASHINGTON — The Internal Revenue Service today reminded taxpayers who turned 70½ during 2015 that in most cases they must start receiving required minimum distributions (RMDs) from Individual Retirement Accounts (IRAs) and workplace retirement plans by Friday, April 1, 2016.

The April 1 deadline applies to owners of traditional (including SEP and SIMPLE) IRAs but not Roth IRAs. Normally, it also applies to participants in various workplace retirement plans, including 401(k), 403(b) and 457(b) plans.

The April 1 deadline only applies to the required distribution for the first year. For all subsequent years, the RMD must be made by Dec. 31. So, a taxpayer who turned 70½ in 2015 (born after June 30, 1944 and before July 1, 1945) and receives the first required distribution (for 2015) on April 1, 2016, for example, must still receive the second RMD by Dec. 31, 2016.

Affected taxpayers who turned 70½ during 2015 must figure the RMD for the first year using the life expectancy as of their birthday in 2015 and their account balance on Dec. 31, 2014. The trustee reports the year-end account value to the IRA owner on Form 5498 in Box 5. Worksheets and life expectancy tables for making this computation can be found in the appendices to Publication 590-B.

Most taxpayers use Table III  (Uniform Lifetime) to figure their RMD. For a taxpayer who reached age 70½ in 2015 and turned 71 before the end of the year, for example, the first required distribution would be based on a distribution period of 26.5 years. A separate table, Table II, applies to a taxpayer married to a spouse who is more than 10 years younger and is the taxpayer’s only beneficiary. Both tables can be found in the appendices to Publication 590-B.

Monday, March 21, 2016

Join NFS @ Mr. Dooley's Olde Irish Pub Run

Mr. Dooley's Olde Irish Pub 5k/10k Run
Olde Irish Pub Run Facebook Page
Saturday, March 26th, 2016
9:00 am start

  • WRENTHAM -- The 4th annual Olde Irish Pub Run will be held on Saturday, March 26th, at 9 a.m. from Mr. Dooley's Olde Irish Country Pub, 303 Shears St., Wrentham.
    The USATF-certified course loops around scenic country roads, and participants can choose a flat single loop (5K) or double loop (10K).
    Prizes will be awarded to the top three male and female finishers in various age categories. The first 100 participants who register by March 16 will receive free T-shirts. The post-race buffet will be provided by Mr. Dooley’s Olde Irish Country Pub.
    The registration fee is $35 or $40 the day of the race. Sign up online HERE. Proceeds benefit King Philip Regional High School Track & Cross Country. Sponsored by NFS - Northeast Financial Strategies Inc, Marathon Sports, NRG LabMr. Dooley's Olde Irish Pub.

Tuesday, March 1, 2016

New Social Security Rules Coming in May 2016

By Robert Deschene, Esq.

Security CardPeople approaching retirement age rely in part on Social Security (SS) to maximize their retirement income, but they also face a labyrinth of confusing laws and regulations.

The dilemma: at what age is it best for you (or your spouse) to start collecting so you get the most retirement dollars? There are no easy answers to that question, and the questions just got more difficult.

New Budget Bill – Surprise!

Congress just enacted and the President signed into law a bipartisan budget bill designed, in part, to avoid another government shut-down.   Effective May 1, 2016, the new law makes major changes to the rules about when and how retirees can claim their SS benefits, and eliminates several planning strategies previously available to them to get more benefit dollars.

The Basics Stay the Same

Some basic rules stay the same.  In general, you can begin collecting SS as early as age 62, but your monthly payment will be much lower than if you delayed collecting until your “full retirement age,” which is between ages 66 and 67 (depending on the year you were born).   Once you start collecting then, your monthly payment amount is locked in, and will never increase (except for annual cost-of-living increases).   But if you further delayed collecting past your full retirement age, and wait until age 70 to collect, your monthly payment increases about 8% a year.

File-and Suspend, or “Having Your Cake and Eating It Too” is Kaput

One lucrative planning strategy no longer available after May was called “file-and-suspend.”  Say Tom and Jane both reached their full retirement age of 66, Tom intends to keep working until at least age 70, but Jane wants to retire now.  Each could start collecting on their own SS, Tom at $1500/month and Jane at $600/month, or $2,100/month.  Instead, Tom would file immediately to collect on his SS, but then “suspend” his right to collect.  Why?