If you are 50 years old or older by the end of your retirement plan year, you are eligible for a catch-up contribution allowed in IRA, 401(k), 403(b) and SIMPLE plans. For more information on the amount of the catch-up contribution allowed by each type of plan and other frequently asked questions, read this Financial Strategy.
If you take a distribution from a retirement account before you reach the age of 59 1/2, generally, you will have to pay a 10% early distribution penalty. However, if you take an early distribution to pay for unreimbursed medical expenses or qualified higher education expenses, you may be able to avoid the early withdrawal penalty. For other common exceptions in which you may not be subject to the 10% penalty, read this C.P.A. Insight.
If you are planning the sale of your medical practice to finance your retirement, you may need to increase the value of your practice.
The Economic Growth and Tax Relief Reconciliation Act of 2001 included provisions that should simplify many investors’ retirement accounts, and possibly decrease the number of separate accounts needed.
Although you may withdraw money from an IRA at any time, these funds are intended for retirement. To encourage you not to touch this money until you retire, the IRS imposes penalties for early withdrawals.
Fixed-income investments are designed to bridge the gap between after-tax income and your desired after-tax spending.
Once you reach 70½, you are required to withdraw from your IRA. How much do you withdraw? The IRS has simplified the calculation with Life Expectancy Tables to help you calculate your withdrawal.
TIPS are a type of security offered by the U.S. Treasury that provides protection against inflation. When you purchase a TIP, you will receive the interest payments semi-annually and you will at least receive your original principal amount at maturity, however unlike a regular Treasury bond, the interest and redemption amounts are tied to inflation rates.
The risk of investing in bonds depends on the type of bond, the quality and the holding period.
