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☆ 83% of teenagers are already thinking about retirement — but many make this one mistake
▼ + stars: | 2024-04-22 | by ( Jessica Dickler | ) www.cnbc.com time to read: +3 min

Overall, teenagers are taking a greater interest in their long-term financial health — although far fewer understand basic retirement planning. "This research shows retirement is more top-of-mind for teens than one might think," said Jack Kosakowski, Junior Achievement's president and CEO. Slott recommends opening a Roth individual retirement account to get a head start. Contributions to a Roth IRA are taxed upfront, and earnings grow tax-free. Once contributed, the money inside a Roth IRA account can be invested appropriately to suit any type of long-term goal.

Persons: Jack Kosakowski, Junior, Ed Slott, Slott, Roth, Christopher Jackson's, Jackson Organizations: Junior, Da Vinci Communications High School, CNBC Locations: Southern California

☆ Here's what to know before withdrawing funds from inherited individual retirement accounts
▼ + stars: | 2024-04-22 | by ( Kate Dore | Cfp | ) www.cnbc.com time to read: +1 min

If you've inherited an individual retirement account since 2020, you could have a shorter timeline to withdraw the money, which can trigger tax consequences. But there are a few things to consider before emptying an inherited account, experts say. Under the Secure Act of 2019, so-called "non-eligible designated beneficiaries," have a 10-year window to deplete an inherited IRA. Non-eligible designated beneficiaries are heirs who aren't a spouse, minor child, disabled or chronically ill. Certain trusts may also fall into this category. They just want the money," said individual retirement account expert and certified public accountant Ed Slott.

Persons: you've, RMDs, Ed Slott Organizations: IRS, Finance

☆ IRS waives mandatory withdrawals from certain inherited individual retirement accounts — again
▼ + stars: | 2024-04-19 | by ( Kate Dore | Cfp | ) www.cnbc.com time to read: +1 min

The IRS has again waived required withdrawals for certain Americans who have inherited retirement accounts since 2020. Before the Secure Act of 2019, heirs could "stretch" retirement account withdrawals over their lifetime, which reduced year-to-year tax liability. Now, certain heirs have a shorter timeline due to changed rules for so-called required minimum distributions, or RMDs. Under the Secure Act, certain heirs must empty inherited accounts by the 10th year after the original account owner's death. The latest penalty relief only applies to certain heirs, known as "non-eligible designated beneficiaries," subject to the 10-year withdrawal rule under the Secure Act.

Persons: Biden, Ed Slott Organizations: IRS, Secure, Finance

☆ The No. 1 money mistake to avoid if you're laid off: The 'long-term consequences' will be 'very painful’
▼ + stars: | 2024-02-20 | by ( Cheyenne Devon | ) www.cnbc.com time to read: +2 min

"The long-term consequences of that are going to be very painful," she tells CNBC Make It. You'll generally need to pay income tax on any money you withdraw, which could result in a higher tax bill. You may derail your long-term retirement goalsIn addition to potentially facing a costly tax bill, cashing out your 401(k) may negatively impact your ability to meet your long-term retirement goals. When you withdraw funds invested through your 401(k), that money loses out on the opportunity to continue growing through the power of compound interest. On top of that, cashing out your 401(k) means you're essentially restarting your retirement saving journey.

Persons: Anne Lester, you've, Lester, Ed Slott Organizations: CNBC

☆ 3 charts that will make you a smarter investor in 5 minutes
▼ + stars: | 2023-11-19 | by ( Ryan Ermey | ) www.cnbc.com time to read: +3 min

Each illustrates an important lesson that, if internalized, will hopefully make you a wiser investor. But if you're a younger investor, the best time to invest was yesterday. The only difference: One starts investing at 22, one starts at 27, and the third starts at 32. The investor who started early wins by a landslide, and not because they invested all that much more. After 45 years in the market, the investor who began at 22 has put $109,000 into the market — just $24,000 more than the investor who began 10 years later.

Persons: Ed Slott, you'd, We've, there's, Sam Stovall, they'll, Wayne Gretzky Organizations: TI, CNBC Locations: U.S

☆ Withdraw funds from inherited accounts now to avoid getting 'buried in taxes' later, IRA expert says
▼ + stars: | 2023-10-27 | by ( Kate Dore | Cfp | ) www.cnbc.com time to read: +1 min

Elenaval | Room | Getty ImagesIf you inherited an individual retirement account, the IRS waived penalties for some missed mandatory withdrawals this year. But there could be reasons to start taking them anyway, experts say. Prior to the Secure Act of 2019, heirs could "stretch" IRA withdrawals over their lifetime, which minimized year-to-year tax liability. By starting RMDs sooner, heirs can smooth out taxes over a number of years and possibly reduce the overall bill with proper planning, Slott said. Leverage 'pretty attractive' tax rates nowAnother reason to take RMDs sooner may be to leverage the current federal income tax rates, which could be changing in a couple of years.

Persons: Ed Slott, Slott, Ben Smith Organizations: Secure, Financial Locations: Milwaukee

☆ Retirement account withdrawal rules are 'so complicated' for inherited IRAs, expert says. What to know
▼ + stars: | 2023-10-26 | by ( Kate Dore | Cfp | ) www.cnbc.com time to read: +2 min

But the gift comes with mandatory withdrawals for heirs and following the rules can be difficult, experts say. According to the Secure Act of 2019, certain heirs now have less time to deplete inherited accounts due to a change in so-called "required minimum distributions." But there's now a 10-year withdrawal rule for certain heirs, meaning everything must be withdrawn by the 10th year after the original account owner's death. The rule applies to accounts inherited by so-called "non-eligible designated beneficiaries" on Jan. 1, 2020, or later. Ed Slott IRA expertNon-eligible designated beneficiaries are heirs who aren't a spouse, minor child, disabled, chronically ill or certain trusts.

Persons: Ed Slott, Ashton Lawrence, there's, Slott, RMDs Organizations: Istock, Getty, Secure, Mariner Wealth Advisors, IRS Locations: Greenville , South Carolina

☆ Retirement withdrawal rules are 'crazy' this year, IRA expert says. Here's what you need to know
▼ + stars: | 2023-10-25 | by ( Kate Dore | Cfp | ) www.cnbc.com time to read: +2 min

"They're crazy," said IRA expert and certified public accountant Ed Slott, describing the new RMD rules. For 2023, RMDs apply to both pretax and Roth 401(k) accounts, along with other workplace plans. Secure 2.0 bumped the RMD beginning age to 73 from 72 for pretax IRA owners and retirement plan participants. If you turn age 72 in 2023, you can delay RMDs until age 73. But if you turned 72 in 2022, you needed to take your 2022 RMD by April 1, 2023, and your 2023 RMD by year-end.

Persons: RMDs, Ed Slott, pretax, Roth, Slott, Ben Smith Organizations: Sdi, Financial Locations: Milwaukee

☆ The 'holy grail' of investing accounts: How IRAs can boost your retirement savings
▼ + stars: | 2023-04-26 | by ( Ryan Ermey | ) www.cnbc.com time to read: +5 min

Like workplace retirement accounts, such as 401(k)s, IRAs provide another way to save for retirement. And withdrawing money in retirement without owing any tax is the "holy grail," says Ed Slott, a certified public accountant and founder of IRAHelp.com. Roth IRAs offer no upfront deduction, because they're funded with money you've already paid taxes on. Plus, you can take out any of the money you've put in at any time without penalty. How do I open a Roth IRA?

☆ Is it smarter to get a tax refund in 2023 or more money throughout the year? Tax experts weigh in
▼ + stars: | 2023-04-21 | by ( Ryan Ermey | ) www.cnbc.com time to read: +1 min

Namely, you'd be wise to assess your withholding, tax experts say. To adjust your withholding, you'll have to file a new W-4 form with your company. If you instructed your employer to withhold too much throughout 2022, you got a tax refund; too little and you owed a bill. You can use the IRS's withholding estimator tool to give yourself a good idea of your breakeven number. But depending on your financial habits, you may want to adjust to receive a refund or owe a bill, tax experts say.

☆ Why it's 'just no question' new investors should start by opening a Roth IRA, expert says
▼ + stars: | 2023-04-21 | by ( Lorie Konish | ) www.cnbc.com time to read: +3 min

A Roth IRA allows investors who qualify to set aside after-tax money up to a certain limit each year. Who can invest in a Roth IRAImportantly, you can start contributing to a Roth IRA starting from any age if you have taxable compensation. In 2023, investors may put up to $6,500 in traditional or Roth IRAs (or $7,500 if they're 50 or older). The way you invest the money inside a Roth IRA account can be adjusted to suit your goals. What you choose to put in the Roth IRA can be either savings or investments.

☆ Trying to fund an individual retirement account ahead of the Tax Day deadline? Here's what you need to know
▼ + stars: | 2023-04-18 | by ( Lorie Konish | ) www.cnbc.com time to read: +3 min

The deadline to make IRA contributions generally coincides with Tax Day. Some residents of eight states have federal tax deadline postponements until May, July or October due to natural disasters, according to the IRS. Roth IRA contributions, on the other hand, consist of post-tax contributions. You may be able to get around these restrictions through a Roth conversion, where traditional IRA funds are moved to a Roth IRA. While funding a Roth IRA may not immediately affect your tax circumstances now, experts say it may be the better pick in the long run.

☆ Try this 30-day money challenge to get smarter and be more successful with your money
▼ + stars: | 2023-04-01 | by ( Emmie Martin | ) www.cnbc.com time to read: +14 min

Day 2: Find an accountability buddyYour financial goals don't mean much if you don't stick to them. This ratio represents how much of your available credit you're using at any given time. Take a look at your credit card statements for the past 12 months. There are a number of ways to check your score for $0, starting with your credit card issuer or bank, many of which offer free services to their clients. Day 16: Update your income with your credit card companyIf you've received a raise or promotion since opening your credit card, consider reporting your increased income to your lender.

☆ Roth IRA 'five-year rule' can trigger an unexpected tax bill: Here's what you need to know
▼ + stars: | 2023-02-06 | by ( Greg Iacurci | ) www.cnbc.com time to read: +4 min

Taxes on investment earnings are at "ordinary income" tax rates, not the preferential tax rates for capital gains. Roth IRA owners must have their account for at least five years to avoid paying income tax on any withdrawn investment earnings. Here's a simple example: Let's say a 60-year-old contributed $6,000 to a Roth IRA in January 2020. It's the saver's only Roth IRA and the first time they've contributed money to such an account. Who will 'never need to know the 5-year rule'Of course, not everyone is eligible to contribute to a Roth IRA.

☆ Stocks are down, but it's a 'great time' for a Roth IRA conversion—here's why
▼ + stars: | 2023-01-04 | by ( Ryan Ermey | ) www.cnbc.com time to read: +5 min

Because Roths are funded with money you pay taxes on upfront, you'll owe a bill on any investments you move over. Traditional vs. Roth IRAs: 'You can't beat a 0% tax rate'To understand the benefits of a Roth conversion, it's important to know the key differences between traditional and Roth IRAs. Because you haven't been taxed on any of the money in your traditional IRA, you'll owe taxes if you convert to a Roth. If you convert it to a Roth, you'd owe taxes on the dollar value of the shares: $1,000. Once your stocks are converted, they'll ideally continue to grow tax-free in your Roth account until you're ready to withdraw the money in retirement.

☆ 4 new ways to avoid a tax penalty for early individual retirement account withdrawals
▼ + stars: | 2022-12-28 | by ( Greg Iacurci | ) www.cnbc.com time to read: +9 min

New exceptions to the 10% tax penaltySavers generally incur a 10% tax penalty if they withdraw money from a retirement account before age 59½. The following list outlines rules in the new legislative package that waive the 10% early withdrawal penalty for IRA owners. Terminal illness A terminally ill person wouldn't be penalized for withdrawing retirement funds before age 59½. Disability Certain disabled retirement savers under age 59½ aren't beholden to the tax penalty. IRS levy You won't incur a penalty if the distribution results from an IRS tax levy (i.e., if the IRS takes your retirement funds to satisfy a tax debt).

☆ Here are 10 ways to avoid the early withdrawal penalty for individual retirement accounts
▼ + stars: | 2022-12-22 | by ( Greg Iacurci | ) www.cnbc.com time to read: +7 min

But there are some situations in which account owners — both those with savings in individual retirement accounts and workplace plans like a 401(k) — can access that money early without penalty. "The worst thing you can do is take from your retirement account before its intended purpose, because then what will be for your retirement?" The list below outlines situations in which IRA owners wouldn't owe the 10% early withdrawal penalty. watch nowThe IRA withdrawal can be used for you, a spouse or your child, among other qualifying family members. The IRA withdrawal must also occur the year you received unemployment, or in the following year.

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