It’s never too late to make these three retirement winning plays | personal financing

The good news is that it’s never too late to do some of the things you may have been sitting on. Here are three plays you can do to make the most of your savings.

If you have a 401(k) from an old job, you might benefit from implementing a 401(k) pass to an IRA. Most 401(k) plans charge high fees and offer limited investment options. If you roll your holdings into an IRA, you will be able to eliminate most, if not all, of those fees, and open the door to many other investment options.

You can transfer your 401(k) to an existing IRA or a new IRA. If your current employer allows you to, you may be able to transfer funds directly to your new 401(k). This can be useful if you do tailgate dung regularly. It may also be useful if you plan to retire early and take advantage of Rule 55, which gives you access to 401(k) assets without a penalty after separation from service.

The Roth IRA’s massive tailgate was on the chopping block last year, but managed to slip past it, as the bill that would close the tailgate was stuck in Congress. Lawmakers can look forward to ending this vulnerability soon, but you may be able to take advantage of it until then.

The massive backdoor Roth IRA is only available if your employer’s 401(k) plan makes non-Roth after-tax contributions and in-service carry-overs or withdrawals. Benefit from the maximum contribution limit for 401(k) plans, which is $61,000 in 2022 plus an additional $6,500 in compensatory contributions if you are 50 or older (therefore, $67,500). In other words, the combined contribution from your pre-tax or Roth contribution, employee matching, and after-tax contributions can be up to $67,500.

Once you make an after-tax contribution, you’ll need to transfer it to a Roth account. This can be within a 401(k) or a separate Roth IRA. Keeping money in a tax-deferred account in your 401(k) will create an additional tax burden when you’re looking to withdraw. If you renew the contribution only after tax, you won’t owe any additional taxes on the extension, and then the money can grow tax-free in a Roth account until you’re ready to withdraw it in retirement.

If you have a lot of money in pre-tax retirement accounts like a 401(k) or IRA, you may want to have that money in a Roth account when it’s most beneficial.

Someone who retires in their early 60s with significant pre-tax savings should take advantage of the years before they need to start making required minimum distributions and collecting Social Security benefits.

Social Security has a maximum age of 70, and required minimum distributions begin at age 72.

Withdrawals from a traditional IRA or 401(k) can become a much more tax burden after you start collecting Social Security because there is a limit to where Social Security benefits become taxable. Furthermore, many retirees may be able to keep their income below the minimum by paying 0% taxes on their long-term capital gains, but this becomes more difficult when the required minimum distributions come into play.

The way to reduce the minimum distribution required is to convert your traditional IRA to a Roth IRA when you are able to achieve a lower tax rate. You may also be able to take advantage of the downturn in the market to move assets when they are less valuable. Roth IRAs do not have any required minimum distributions, and withdrawals do not affect your taxes. Thus, paying taxes in your 60s can save you a lot of taxes in the future.

Everyone loves your retirement plan and forget about it, but if you really want to maximize your retirement savings, make sure you have enough to fund your retirement lifestyle, and maybe leave some to your heirs or charitable foundation, you may have to do it forever. These 3 retirement plays will help you keep more of your money, and it’s probably never too late to earn it.

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