Required Minimum Distributions(RMD) for a Roth IRA?

One of the really good things about a Roth is that RMD's don't apply except for one big exception. If a non spouse beneficiary inherits a Roth IRA, then they are subject to the RMD rules and have to distribute the benefit over their life expectancy. A surviving spouse can elect to roll over the Roth to their own Roth.

Social Security Benefits before Full Retirement Age

If you choose to sign up for social security before your full retirement age (FRA) which is age 66 for those born between 1943 and 1954, your benefit will be reduced if your earned income (wages and self employment income) exceed certain amounts. The amounts for 2013 are $15,120 for years prior to the year you reach FRA and $40,080 in the year you reach FRA. The earnings limit can change every year. There is no limit to what you can earn after the month you reach FRA. Benefits are reduced $1 for every $2 you earned over the $15,120 and $1 for every $3 earned over the $40,080. This is a good reason not to take social security before your FRA.

What Medicare Doesn't Cover

Many people think medicare covers all medical expenses once you turn 65. Unfortunately, there are some very large costs that are not covered at all like nursing home care after 100 days. Also medicare does not cover hearing aids, dental care, eyeglasses,  routine foot care, and 35% of outpatient mental health care.  One thing that medicare does pay 100% for is hospice care for as long as the doctor certifies that it is necessary for the terminally ill.

IRS Installment Agreement

If you can't pay your Federal taxes, you have an option of requesting an installment agreement by filing form 9465. On the form, you promise to pay a fixed amount on a certain day each month. The IRS prefers that you set up a direct debit to your bank account each month and encourage you to do so by discounting the regular one time user fee of $105 to $52 if you choose the direct debit option. Interest of 3%(current Federal rate) and late payment penalties of .5% (25% max) continue to apply until the taxes are paid. I usually encourage clients in this situation to pay as much as they can when they can to maintain more flexibility and not be tied down to a fixed payment.

The Best Kind of Income: Nontaxable

Other than free coffee provided by your employer, what are some other nontaxable items out there? Some of the most common include: municipal bond interest, non cash gifts from your employer of small value like a holiday turkey, gifts from family, inheritances in most states, life insurance proceeds,  lawsuit awards for physical injury or sickness, and up to $5,250 of qualified educational assistance from your employer.  Inheritances are all tax free from Federal taxes but some states tax inheritances above a certain amount.