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☆ Great savers could face a 'tax time bomb' in retirement, advisor says — here's how to avoid it
▼ + stars: | 2024-06-25 | by ( Kate Dore | Cfp | ) www.cnbc.com time to read: +1 min

If you're nearing retirement with a large pre-tax 401(k) plan or individual retirement account balance, you need a plan for managing future levies, financial experts say. Great savers could face a "tax time bomb" in retirement when required withdrawals kick in, said certified financial planner Scott Bishop, partner and managing director of Presidio Wealth Partners in Houston. RMDs are typically tied to pre-tax retirement accounts, which incur regular income taxes for withdrawals. Those RMDs could push some retirees into a higher tax bracket, according to Bishop, who is also a certified public accountant. Those lower rates are scheduled to sunset after 2025 without an extension from Congress.

Persons: Scott Bishop, Joe Biden Organizations: Presidio Wealth Partners, Finance Locations: Houston

☆ How couples answer one question shows whether they communicate well about money, Cornell research finds
▼ + stars: | 2024-06-24 | by ( Lorie Konish | ) www.cnbc.com time to read: +2 min

Skynesher | E+ | Getty ImagesWhat successful couples do differentlyCouples who say they feel their financial problems are perpetual are more likely to assume they have no solution, according to Cornell's research. Unfortunately, most couples by default tend to view their financial problems as perpetual, and therefore avoid talking about financial issues, Garbinsky said. watch nowCommunication avoidance may also contribute to financial infidelity, where a partner will withhold or hide financial information from their partner. "If you're not talking and if you're hiding things from your partner, it is having negative effects on your relationship quality over time," Garbinsky said. To start to unravel financial conflict, it helps to backtrack and talk about the money memories each partner has and how that shapes their feelings about money now, he said.

Persons: Garbinsky, Jude Boudreaux, Boudreaux Organizations: Partners, CNBC FA Locations: New Orleans

☆ A rainbow logo isn't enough: How to find financial institutions that actually care about LGBTQ+ people
▼ + stars: | 2024-06-24 | by ( Ryan Ermey | ) www.cnbc.com time to read: +6 min

Rather, look to work with institutions and individuals that are aware of the community's unique financial needs . Some 3 in 10 LGBTQ+ adults (30.8%) say they experienced discrimination when accessing financial services, according to a recent survey from the Human Rights Campaign . In many cases, parade sponsors and participants include financial institutions, from banks to real estate agencies to investment brokerages. Making that process easier is a career goal for Charles Chaffin, a financial psychologist who founded Affirming Advisor — a program designed to help financial firms better serve LGBTQ+ clientele. Vet the firmIf a financial institution is publicly supportive of the LGBTQ+ community, that's certainly a good start, says Jay.

Persons: We've, Chris Jay, you've, Charles Chaffin, —, Chaffin, you'll, that's, Jay Organizations: Merrill, Human, CFP, LGBT Chamber, Commerce, Realtors, CNBC Locations: Seattle

However, I was raised in a household where it was deeply ingrained that we were to be generous and help others at all costs. While I do want to help my family, this messaging isn't conducive to tucking funds away for Future Me and putting my own financial needs and goals top of mind. By taking care of your financial needs, you'll be in a much better place to care for your loved ones. Depending on your situation, you not only need to know your wants and needs, but you also might need to know your family's wants and needs. If you want help with your financial situation and juggling your needs and your family's needs, consider working with a financial advisor.

Persons: I've, churchgoers, Thao Truong, Truong, you'll, I'm Organizations: Service, Business, Morton Wealth, Budget, Foundation, Financial Locations: Los Angeles, Vietnam

☆ If you’re grabbing tax-free income from this asset, you may be sacrificing yield
▼ + stars: | 2024-06-21 | by ( Darla Mercado | Cfp | ) www.cnbc.com time to read: +5 min

Though municipal bonds generally offer income that's free of federal income taxes – and state taxes if the investor resides in the issuing state – they also come with lower yields compared to other bonds. When it comes to muni bonds, the higher your tax bracket, the more valuable the tax-free income is. A tax-conscious approach to fixed income You don't have to bulk up on municipal bonds to get the best yield for your tax scenario. Municipal bonds are good contenders in taxable brokerage accounts, where investors can benefit from their tax-free income. Some fund families offer "tax-aware strategies" either in mutual funds or ETFs, which can include some exposure to municipal bonds, as well as equities.

Persons: Wells Fargo, aren't, Nisha Patel, That's, Collin Martin, Michael Carbone, it's, Beth Foos Organizations: Wells, Wells Fargo Investment Institute, Federal Reserve, SEC, Bond, Corporate Bond, York Life Investments, Schwab Center, Financial Research, Morningstar Locations: Wells Fargo, Chelmsford , Massachusetts

☆ As retirement looms, many Gen Xers are still playing catch-up
▼ + stars: | 2024-06-20 | by ( Genna Contino | ) www.cnbc.com time to read: +1 min

About half, or 48%, of Gen Xers say they won't have enough money to enjoy their retirement, a 2024 report from global asset management company Natixis Investment Managers found. Gen X is typically defined as those born between 1965 and 1980. "I think where it's very stressful for [Gen X] is being sandwiched in that tug of war, saving for their retirement as well as helping aging parents," said Marguerita Cheng, a certified financial planner and Gen X mother. Gen X is the first generation of U.S. workers to come of age with 401(k) plans as their primary retirement vehicle after employers largely shifted away from traditional pensions in the 1980s. As retirement approaches, Gen X is feeling the financial squeeze — but financial planners say there are still ways to maximize your savings.

Persons: Gen Xers, they'll, Gen, Marguerita Cheng, Cherry, Cheng Organizations: Natixis Investment, Preston D, Blue, Wealth, CNBC, CoreData Research

☆ Trump tax breaks are set to expire after 2025. Here's what advisors are telling their clients
▼ + stars: | 2024-06-18 | by ( Kate Dore | Cfp | ) www.cnbc.com time to read: +1 min

With trillions of dollars in tax breaks scheduled to expire after 2025, financial advisors are working with clients to prepare for the looming tax cliff. Enacted by former President Donald Trump, the Tax Cuts and Jobs Act of 2017, or TCJA, included lower federal income tax brackets, bigger standard deductions and higher gift and estate tax exemptions, among other provisions. If Congress doesn't take action, those tax breaks will sunset after 2025. And if the TCJA provisions expire, more than 60% of tax filers could face increased taxes, according to the Tax Foundation. Here are some tax strategies advisors are discussing with their clients.

Persons: Donald Trump, Jim Guarino, Baker Newman Noyes, Mary, Guarino Organizations: Tax, Finance Locations: Woburn , Massachusetts

☆ IRS: Taxpayers may avoid a penalty by making a second-quarter estimated payment by June 17
▼ + stars: | 2024-06-14 | by ( Kate Dore | Cfp | ) www.cnbc.com time to read: +1 min

The second-quarter estimated tax deadline for 2024 is June 17, and you could owe a penalty if you don't send a payment, according to the IRS. You typically owe estimated tax payments for income without withholdings, such as from contract jobs, freelancing or gig economy work, or if you run a small business. But quarterly estimated tax payments are not just for the self-employed or small business owners, experts say. You must make quarterly estimated tax payments if you expect to have at least $1,000 in tax liability or more on your 2024 return. For the 2024 tax year, the estimated tax deadlines are April 15, June 17, Sept. 16 and Jan. 15, 2025.

Persons: Kelly Renner Organizations: Finance, Biden, Partners Locations: Augusta , Georgia

☆ Nvidia’s wild ride in 2024 is boosting insiders’ wealth. What it could mean for employees holding the stock
▼ + stars: | 2024-06-11 | by ( Darla Mercado | Cfp | ) www.cnbc.com time to read: +5 min

The stock's rise has been a boon to employees and insiders at the chip company who own shares. So-called RSUs provide workers with shares at a future date following a vesting period of typically three to five years. Employers can also offer incentive stock options, which allow employees to buy a specified number of shares at a stated – or strike – price. Workers who exercise their ISOs are also subject to capital gains taxes when they sell the stock they've purchased. Nonqualified stock options are another form of equity compensation.

Persons: Tench Coxe, Blair duQuesnay, they're, Albert J, Campo, – Organizations: Nvidia, Securities and Exchange Commission, Ritholtz Wealth Management, CNBC's, Employees, Workers, CPA, Campo Financial Locations: New Orleans, Freehold , New Jersey

☆ Home equity is near a record high. Tapping it may be tricky due to high interest rates
▼ + stars: | 2024-06-10 | by ( Greg Iacurci | ) www.cnbc.com time to read: +5 min

But tapping it may be tough due to high interest rates, according to financial advisors. Reverse mortgageA reverse mortgage is a way for older Americans to tap their home equity. A reverse mortgage is likely best for people who have much of their wealth tied up in their home, advisors said. A home equity conversion mortgage (HECM) is the most common type of reverse mortgage, according to the Consumer Financial Protection Bureau. watch nowA reverse mortgage is available as a lump sum, line of credit or monthly installment.

Persons: Selma Hepp, Hepp, Lee Baker, Atlanta . Baker, Kamila Elliott, Grace Cary, Elliott, Baker, Alexander Spatari, Cash Organizations: Getty, Apex Financial Services, Collective Wealth Partners, Consumer Financial, Bureau Locations: Cultura, Atlanta .

Generating income with dividend stocks Dividend stocks have long been a staple of income investors' portfolios. Municipal bonds offer income that's free of federal tax, however. These names trade on exchanges like stocks, and they can offer dividend yields upward of 6%. Options strategies to create income Derivative income funds , such as the JPMorgan Equity Premium Income ETF (JEPI), gathered some $22 billion in 2023, according to Morningstar. Further, consider comparison shopping, as all "derivative income" funds have their own quirks and differences in strategies could affect their risk/return profile.

Persons: Janus Henderson, Walt Disney's, Amber Milam, Jefferies, It's, Savita Subramanian, Subramanian, Russell, Louis, Morningstar, Mike Mulach, Rick Rieder, he'd, Kathleen McNamara, there's, –, Bill Gross, JEPI, Cash, Ashton Lawrence Organizations: Federal Reserve, Meta, Mobile, Bank of America, IBM, . Investment, Fitch, Credit, nab, ICE, Federal Reserve Bank of St, Louis Fed, UBS, UBS Wealth Management, York Life Investments, –, JPMorgan, Mariner Wealth Advisors Locations: U.S, Greenville , South Carolina

☆ Mega backdoor Roth conversions can boost tax-free growth — if you avoid these mistakes
▼ + stars: | 2024-06-06 | by ( Kate Dore | Cfp | ) www.cnbc.com time to read: +1 min

Mega backdoor Roth conversions can significantly boost tax-free retirement savings — but this maneuver is not available for all investors and mistakes are common, experts say. A mega backdoor Roth conversion involves after-tax 401(k) contributions, which are shifted to Roth accounts. The full 401(k) limit is $69,000 for 2024, including employee deferrals, employer matches, profit sharing and other deposits. Mega backdoor Roth conversions are "a great tool when used appropriately," but you need to know your goals first, said certified financial planner Jamie Clark, founder of Ruby Pebble Financial Planning in Seattle. More from Personal Finance:Mega backdoor Roth conversions can be a 'no brainer' for higher earners, expert saysWhy a five-day return to office is unlikely, Stanford economist saysHere's how 'spaving' could hurt your financesHere are some common mega backdoor Roth conversion mistakes and how to avoid them, according to experts.

Persons: Roth, deferrals, Jamie Clark, Stanford, Here's Organizations: Ruby, Financial, Finance, Mega Locations: Seattle

☆ 36% of Americans think real estate is the best long-term investment. Here's the easiest way to get started
▼ + stars: | 2024-06-06 | by ( Ana Teresa Solá | ) www.cnbc.com time to read: +1 min

Some Americans believe that real estate is the best long-term investment. If you're among them, real estate investment trusts, or REITs, might be the easiest way to tap the market. About 36% of surveyed Americans ranked real estate as the top long-term investment, more than cited stocks or mutual funds (22%), gold (18%), and savings accounts or certificates of deposits (13%), according to a recent survey by Gallup, a global analytics and advisory firm. A REIT is a publicly traded company that invests in different types of income-producing residential or commercial real estate. In many cases, you can buy shares of publicly traded REITs like you would a stock, or shares of a REIT mutual fund or exchange-traded fund.

Persons: Stacy Francis, Francis Organizations: Gallup, Finance, Francis Financial, CNBC Financial Locations: New York City

☆ You could lose money by maxing out your 401(k) plan early — unless it has this special feature
▼ + stars: | 2024-06-05 | by ( Kate Dore | Cfp | ) www.cnbc.com time to read: +1 min

But you can lose money by maxing out your 401(k) too early in the year — unless the plan has a special feature. Most 401(k) plans offer an employer match, which uses a formula to deposit extra money into the account, based on your deferrals. Typically, you must contribute at least a certain percentage of income each paycheck to receive the year's full employer match. However, some 401(k) plans offer a "true-up," or additional deposit of the remaining employer match, for employees who max out contributions before the end of the year. It's typically most common in bigger plans, experts say.

Persons: maxing, Tommy Lucas, Moisand Fitzgerald Tamayo Organizations: Finance, Investor, America's Locations: Orlando , Florida

☆ With Big Tech’s runaway 2024, it just might be time to part with a few winners. Here's why
▼ + stars: | 2024-06-05 | by ( Darla Mercado | Cfp | ) www.cnbc.com time to read: +6 min

Those highly appreciated positions can change the risk profile of your portfolio, particularly if it's been a long time since you last rebalanced. Managing the tax hit Trimming heavily appreciated positions in a portfolio that's held in a taxable account may come with a capital gains hit. One potential way to mitigate the tax is to use realized losses to offset those capital gains. In a year when losses exceed capital gains, investors can apply up to $3,000 of those losses to offset ordinary income and then carry over the remainder. Normally, these holdings would be the ones subject to the heftiest capital gains taxes if they were sold.

Persons: Blair duQuesnay, it's, Morningstar, Amy Arnott, Arnott, Roger Aliaga, Diaz, We've, Aliaga, Russell Organizations: Nvidia, Ritholtz Wealth Management, CNBC's, Vanguard, Investors, Federal Reserve, Bond Market, SEC, Aggregate Bond, U.S, Taxpayers Locations: New Orleans

☆ I'm 43 and have a teenager and a baby. I stopped saving for college to pay for diapers and formula.
▼ + stars: | 2024-06-03 | by ( Kelly Burch | ) www.businessinsider.com time to read: +4 min

Ian is a typical teenager who would rather be playing video games with his friends than interacting with a baby. Even though I'm a Certified Financial Planner, the process of updating our finances has been intense, and it's not over yet. I stopped contributing to Ian's college savingsEach month, I spend about $600 to $900 on diapers, formula, and other baby essentials. Plus, Ian already has a well-funded 529, although he'll still be applying for financial aid for college. I've learned that financial plans need to be fluidLife doesn't always turn out how we think it should.

Persons: Sophoan Prak, Ian, Kosal, Allie, it's, he'll, I've Organizations: Service, Vanguard, Business

☆ The average 401(k) savings rate recently hit a record — how to know if you're on track
▼ + stars: | 2024-06-03 | by ( Kate Dore | Cfp | ) www.cnbc.com time to read: +2 min

The right retirement savings rate depends on your age, expected retirement date, cash flow, projected Social Security income, pensions and retirement plans, among other factors. However, "if you can't reach that 15%, at least try to contribute [enough] to get your full company match," Shamrell said. If you can't reach that 15%, at least try to contribute [enough] to get your full company match. 401(k) savings rates are increasingOver the years, both the individual savings rate and company contributions have continued to climb, said Shamrell with Fidelity. Automatic 401(k) contribution increases have also boosted savings rates, according to Shamrell.

Persons: Mike Shamrell, Shamrell, deferrals, Andrew Herzog Organizations: Fidelity Locations: Plano , Texas

☆ Buying a home in retirement: Here’s what it takes for retirees to get a mortgage
▼ + stars: | 2024-06-01 | by ( Jeanne Sahadi | ) edition.cnn.com time to read: +7 min

Lenders’ chief focus will be on your ability to repay your mortgage with your various sources of non-paycheck income. “When you qualify for a mortgage, it’s all based on your income,” said Melissa Cohn, regional vice president at William Raveis Mortgage. That ratio falls to between 43% and 45% if you’re taking out a jumbo loan, she added. What you should consider before taking out a mortgageEven before seeking a mortgage, get a good grasp on your expected monthly income and expenses in retirement. To get the truest reading on what makes financial sense, compare mortgage expenses to your investment returns on an after-tax basis, Stork noted.

Persons: ”, Jim Stork, homebuyers, you’ve, Melissa Cohn, we’ll, Fannie Mae, ” Cohn, Cohn, Mark Luscombe, Cohen, Lori Trawinski, Trawinski, you’re, Stork, ” Stork Organizations: New, New York CNN, National Association of Realtors, William, Mortgage, Social Security, Wolters, Kluwer, Accounting, AARP Locations: New York, Illinois, Florida

☆ ‘Not all debt needs to be paid off as soon as possible,’ says CFP—what to focus on first
▼ + stars: | 2024-05-31 | by ( Cheyenne Devon | ) www.cnbc.com time to read: +3 min

A little over 40% of Americans would consider themselves financially successful if they were able to clear their debt, according to a recent Bankrate survey. That number includes mortgage debt, car loans, student loan debt and credit card debt. "Not all debt needs to be paid off as soon as possible," she tells CNBC Make It. For each debt, include the name of your lender, your outstanding balance, the minimum payment, any due dates and the interest rate. And the interest rate for federal student loans ranges from 5.5% to 8.05%, per the Department of Education.

Persons: isn't, Avani Ramnani, Francis, Ramnani, Matt Schulz, Louis Organizations: New York Federal Reserve, Francis Financial, CNBC, Federal Reserve Bank of St, of Education

☆ Mega backdoor Roth conversions can be a 'no brainer' for higher earners, expert says
▼ + stars: | 2024-05-31 | by ( Kate Dore | Cfp | ) www.cnbc.com time to read: +1 min

If you're a higher earner and looking to boost tax-free retirement savings, there's a lesser-known strategy that could be worth considering. While Roth individual retirement accounts offer tax-free growth and other benefits, some investors earn too much for direct contributions. For 2024, the adjusted gross income limits for Roth IRA contributions are $161,000 for single filers or $240,000 for married couples filing jointly. However, so-called mega backdoor Roth conversions — which shift after-tax 401(k) contributions to a Roth account — can sidestep Roth IRA income limits for contributions. It's a "no-brainer" after maximizing other tax-advantaged options, assuming you don't need the cash for other goals, said certified financial planner Brian Schmehil, managing director of wealth management at The Mather Group in Chicago.

Persons: Roth, sidestep Roth, It's, Brian Schmehil, Schmehil Organizations: The Mather, Finance Locations: Chicago

☆ These dividend payers helped lift the Dow to fresh heights. How you would have fared if you bought and held them
▼ + stars: | 2024-05-30 | by ( Darla Mercado | Cfp | ) www.cnbc.com time to read: +5 min

However, investors can boost their performance when accounting for reinvesting dividends. The stock has a dividend yield of 4.2%, which is just a snapshot of how much it pays currently. The stock has a dividend yield of 3.1%. If you're a long-term investor, you're dollar-cost averaging," she said. Names on her radar these days include Amgen , which is yielding about 3%, and Southern Copper , which has a dividend yield of 3.2%.

Persons: Goldman Sachs, Dow, it's, Kim Abmeyer, Abmeyer, — CNBC's Chris Hayes Organizations: Dow Jones, UnitedHealth, Microsoft, Abmeyer Wealth Management, Dow, CNBC Pro, Chevron, Pfizer Locations: Wednesday's, Dallas, Chevron

☆ If you have this much money in your 401(k), you're doing better than most—here's how to save even more
▼ + stars: | 2024-05-30 | by ( Ryan Ermey | ) www.cnbc.com time to read: +5 min

Still, when you're saving for something that's decades away, such as retirement, it's easy to feel like you're not doing enough or that you're falling behind without some context. Even if you're not doing as well as you'd like, you may be doing better than most. "Automating savings ensures consistency and discipline, making it easier to stick to your retirement savings goals." It's "essentially free money that can significantly boost your retirement savings," says Basso. "Don't treat your retirement savings like Vegas and go all in on something.

Persons: you've, Ashton Lawrence, Alyson Basso, Basso, couldn't, Andrew Herzog Organizations: Fidelity, Mariner Wealth Advisors, Hayden Wealth Management, CNBC Locations: Greenville , South Carolina, Middleton , Massachusetts, Plano , Texas, Vegas

☆ The generation that may never retire: Why some millennials are behind on savings — and how they can catch up
▼ + stars: | 2024-05-29 | by ( Jacob Zinkula | William Edwards | ) www.businessinsider.com time to read: +14 min

However, the average millennial reported roughly $63,000 in retirement savings so far. While millennials will need more money to retire comfortably, many are far away from the savings milestone experts suggest. What's more, the future of the US Social Security system is uncertain, and longer expected lifespans — while a positive development — will require more retirement savings. How to figure out how much retirement savings you needTiffany Bell, a 36-year-old business management professional based in Houston, didn't always take retirement savings seriously. How millennials can get their retirement savings back on trackWhile some millennials are struggling financially, it's not all doom and gloom when it comes to their retirement prospects.

Persons: Nathaniel Hudson, Hartman, millennials, Tiffany Bell, didn't, Bell, she's, they're, Chris Chen, Chen, Judi Leahy, it's, Leahy, NerdWallet, Bell —, —, X, What's, Nilay Gandhi, Roth, Rita Assaf, Assaf, Gandhi Organizations: Business, Northwestern Mutual, Pew, US Social Security, Fidelity, Financial, Citi, Wealth Management, Vanguard, Big, CFP, Roth IRA, Fidelity Investments, Savings, Hudson Locations: Portland, Houston, New York, Montana

☆ Roth conversions are up in 2024 — but it's not always a 'slam dunk,' accountant says
▼ + stars: | 2024-05-28 | by ( Kate Dore | Cfp | ) www.cnbc.com time to read: +1 min

Roth individual retirement account conversions are up in 2024 — but there are key things to know before converting funds, experts say. There was a 44% year-over-year increase in the number of Roth conversions during the first quarter of 2024, according to data from Fidelity Investments. Roth conversions transfer pretax or nondeductible individual retirement account funds to a Roth IRA, which provides future tax-free growth. However, "it isn't a slam dunk for everyone" because it takes time for tax-free growth to exceed your upfront tax bill, said Marianela Collado, a certified financial planner and CEO of Tobias Financial Advisors in Plantation, Florida. Here’s how much you can saveInvestors need "sufficient assets" outside of retirement accounts to cover the upfront tax bill, warned Collado, who is also a certified public accountant.

Persons: Roth, Marianela Collado, Collado, You'll Organizations: Fidelity Investments, Roth IRA, Financial, Finance, Medicare Locations: Plantation , Florida

☆ You could score a tax break for hiring your own kids this summer — if you follow the rules
▼ + stars: | 2024-05-27 | by ( Kate Dore | Cfp | ) www.cnbc.com time to read: +2 min

"If your child's income falls within the limits, they may not owe any income tax, which can be a win-win," said Lovison, who is also a certified public accountant. If your child's income falls within the limits, they may not owe any income tax, which can be a win-win. What to know before hiring your kidsBefore hiring your children, it's important to know state and federal labor laws, along with tax rules, experts say. "Some states pretty much ban you from hiring children under the age of 14 under any scenario," Lovison said. Payments to children are subject to income tax withholding regardless of the child's age, according to the IRS.

Persons: Sean Lovison, Lovison, Roth, Carol Fabbri Organizations: Social, Advisors, IRS Locations: Philadelphia, , Colorado

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