IRA

Individual Retirement Arrangements, or IRAs, are a great way to save for retirement. Unfortunately, many IRA account holders put their accounts on autopilot. They fund them every year and they adjust their investments from time to time, but they rarely step back and take a careful look at how their IRAs are set up.

Q: I contribute every year to a health savings account and use it to help pay for medical expenses before I reach my deductible. Recently someone told me that they use their HSA to save for retirement, kind of like an IRA. I’m not sure exactly how that works, but is it a good idea? Is it better to use the money now or save it for later?

It’s time for the annual year-end tax scramble—the time when people like you and I try to figure out how to wrangle a few extra bucks out of our anticipated tax bills. After last year’s tax reform, this year’s scramble is probably going to be a little more limited. However, here are a few end-of-year tax saving ideas you should look at.

Retirees of a certain age face the harsh reality that the IRS is lurking in the shadows. As soon as they turn 70 ½ years old, the IRS comes knocking. “Hello, Mr. Retiree,” says the nice IRS man. “You’ve had the tax-free use of this money for years and you have built up a nice little nest egg. Now we want our share.” They get their share by requiring you to take minimum distributions every year from your retirement savings. The distributions are taxed as ordinary income which makes the IRS man very happy. Now what if I told you there was an easy and perfectly legal way to beat the IRS man at his own game?

If you are 70 years old, you have probably already discovered that the IRS has special plans for you this year. They have been watching for years as you have socked away pre-tax money into your retirement accounts. Now, they are finally going to get some of the taxes you’ve been avoiding, by requiring you to take minimum distributions or RMDs from your retirement accounts.