Question: I will be 70 ½ in 2019 and I never rolled over my 401k into my IRA when I retired. Can I calculate my Required Minimum Distribution for both accounts and then just withdraw it all out of my IRA? What is easiest?
Answer: If you have money in both an employer retirement plan, such as a 401k, 403b or 457 plus money in an IRA as of Dec. 31 of the year-end before you are 70 ½, the IRS requires you to take separate RMDs out of each plan.
While you can aggregate all IRAs and take RMDs out of only one account, there is no such ability with employer plans. The penalty for this type of error is 50 percent of the RMD amount, so tread carefully.
Question: Does it help my 2018 taxes if I go ahead and pay my property taxes now instead of waiting for early 2019?
Answer: It only helps if you itemize your deductions. Under the new tax code, the standard deduction has doubled to $24,000 for a married couple or $12,000 for an individual. Ages 65 and over get an additional $1,250 per person. So less people will need to itemize this year than ever before. If that is your situation, no need to write the check before year-end.
Question: I have a whole life policy that I have been paying on for years and I don’t really need the death benefit anymore. Do you have any ideas of what else I could do with it?
Answer: My favorite suggestion is to exchange it for an asset-based long-term care plan. You can do a “1035 exchange” of the cash value in your life policy to fund a LTC policy – one that will provide you tax-free dollars for costs that Medicare doesn’t cover, with the added benefit of leaving a tax-free death benefit to your heirs if you never use it. A win-win, in my book.