Does your Required Minimum Distribution (RMD) exceed your living expenses this year? Or perhaps your income from rental properties, an investment portfolio, or a pension is generating extra cash flow beyond what you need.
Here are three smart ways to keep those assets working for you:
1) Re-Invest Your Assets to Help Them Grow
Get more out of your money by investing extra cash in your taxable brokerage account, IRA or other retirement accounts, which you can do if you meet certain requirements. (Your financial advisor can help you determine your eligibility.)
If your extra income comes from RMDs, your financial advisor may be able to help you fulfill your required distribution by transferring stocks from your IRA into your taxable account. Instead of taking that money in cash, you can fulfill your RMD and stay invested in the market.
Another option may be to transfer cash or stock to a qualified charity, in which case charitable giving rules may apply.
Note: If you don’t have a taxable brokerage account, have your financial advisor assist in setting one up so you can start contributing and growing it over time!
2) Gift or Donate Assets to Reduce Your Tax Burden
For 2014, you can make a tax-free gift of up to $14,000 to as many recipients as you like and not have that amount count against your basic lifetime exclusion of $5.43 million.1 Another option would be to donate some of your extra money to a qualified charity of your choice, which may qualify you for a tax deduction.
3) Invest in Your Family’s Education with a 529 Plan
You can save for your children or other relatives’ higher education through a 529 plan. You won’t receive a tax deduction for contributing to the plan, but the money you contribute grows tax-deferred and the beneficiary of the plan can use that money tax-free for qualified educational expenses. Plus, you maintain control of the account as the custodian until the funds are withdrawn.2 To learn more about the ins-and-outs of 529 plans, read “Gifting Rules Associated with 529 Plans.”
Use these strategies to put your extra retirement income to work for you. Whether it’s opening a taxable brokerage account, setting up a 529 plan, or implementing strategies to keep your assets invested, you may need some help making smart decisions. Our Wealth Managers can help you address those needs by understanding your specific situation and building an investment plan, so you keep your assets working for you over the long-term.
Give one of our Wealth Managers a call today at 1-800-541-7774 to discuss your retirement income options.
Sources:
1 Forbes
2 IRS
