Monday, December 28, 2015 7:42pm
As you plan for retirement, it’s important to stay on top of specific changes that can affect your retirement accounts, Social Security and investments. These changes could impact your saving strategy and might require that you make adjustments to your retirement plan to stay on track.
THE NEW MYRA IS NOW AVAILABLE: The myRA is a Roth individual retirement account that has no fees, and the government guarantees that it will never lose value. This is pegged as an ideal option for those who are just getting started on their retirement savings because it’s easy to set up contributions — you can use funds from your checking or savings account, tax refunds or your income.
This retirement savings account has a variable interest rate, which returned 2.31 percent in 2014. When the account reaches $15,000 or turns 30 years old, the money is transferred to a private sector Roth IRA. If you’ve been waiting for an easy-to-use retirement account, the myRA might be right for you in 2016.
THE SAVER’S CREDIT THRESHOLD INCREASES: People who make slightly more money might have a better chance qualifying for the saver’s credit in 2016. The limit for adjusted gross income increased $250 to $30,750 for single filers. For married couples filing jointly, the AGI limit rose $500 to $61,500. This valuable tax credit helps improve the ability for low- and middle-income retirement savers to contribute more to their retirement accounts.
OBAMA’S 2016 BUDGET STRATEGY FOCUSES ON RETIREMENT ACCOUNTS: According to MarketWatch, President Obama’s budget proposals for 2016 include eliminating the special tax break for net unrealized appreciation, or NUA, on retirement accounts, limiting Roth conversions to pretax dollars, putting a cap on retirement savings, creating a 28 percent maximum tax benefit for contributions to retirement accounts, getting rid of deductions for dividends on stock or publicly traded companies held in employees stock ownership plans and more.
While some or all of Obama’s proposals might or might not happen, these critical changes could impact what you can do with your retirement accounts.
NO MORE ‘RESTRICTED APPLICATIONS’: Under a new budget law, the “restricted-application” option is being eliminated. Before this new law, couples would file a “restricted application” after reaching full retirement age to receive only spousal Social Security benefits while their own retirement benefit earned delayed credits until age 70. But now, only those who will be 62 or older by the end of 2015 will be able to still use this strategy.
MOST SAVERS WILL NEED A NEW ‘FILE AND SUSPEND’ STRATEGY: Here’s another Social Security change that will likely affect many retired couples. In the past, spouses would take advantage of the “file and suspend” strategy to increase their Social Security benefits. In this strategy, Spouse A would file for Social Security benefits but delay them, allowing Spouse B (or an eligible family member) to file for and collect spousal benefits while Spouse A’s retirement benefits continued to grow.
But by May, this will change. As CNBC reports, in order for your spouse to receive a benefit based on your earnings record, you need to actually be receiving benefits, as well. However, if the primary earner turns 62 by Jan. 1, and the other spouse who collects the benefits is at least 66, you and your spouse might be able to continue to use the current file-and-suspend strategy for the next six months or so, NBC News reports.