• Skip to main content
  • Skip to primary sidebar

Ask Liz Weston

Get smart with your money

  • About
  • Liz’s Books
  • Speaking
  • Disclosure
  • Contact

Liz Weston

Monday’s need-to-know money news

April 11, 2022 By Liz Weston

Today’s top story: How Millennials can take their money beyond the basics. Also in the news: A new episode of the Smart Money podcast on spring money tasks and debt strategies, using your tax refund to pay down debt, and how fear, doubt and uncertainty can derail crypto and investing plans.

How Millennials Can Take Their Money Beyond the Basics
You’ve mastered money management fundamentals, which served you well for a time. But a few tweaks to your finances will make a big difference as you approach your 40s and beyond.

Smart Money Podcast: 3 Spring Money Tasks, and Debt Payoff Options
Check on your money goals. Then learn about several debt payoff strategies, which vary in their effectiveness.

Use Your Tax Refund to Knock Down Debt, Lift Your Finances
Bringing balances down can save on interest, help your credit score and clear the path to reaching financial goals.

FUD: Fear, Uncertainty, Doubt Can Derail Crypto, Investing Plans
Cryptocurrency investors commonly use the term FUD to describe what they see as unfounded skepticism.

Filed Under: Liz's Blog Tagged With: cryptocurrency, debt strategies, FUD, millennials and money, Smart Money podcast, tax refunds

Q&A: The rules have changed on inherited IRAs. Here’s what you need to know

April 11, 2022 By Liz Weston

Dear Liz: My husband and I have a combination of traditional and Roth IRAs naming our children and grandchildren as beneficiaries. With the passage of the Secure Act requiring distribution of inherited IRAs within 10 years, we want to revise our plan of leaving all of the investments to our children, as such inherited income would affect their tax bracket also. Do you have recommendations to alter the inherited IRAs to avoid this issue? Our annual fixed income puts us at the top of our tax bracket, meaning we usually cannot manage a traditional IRA to Roth conversion.

Answer: The Secure Act dramatically limited “stretch IRAs,” which allowed people to draw down an inherited IRA over their lifetimes. Now most non-spouse inheritors must empty the accounts within 10 years if they inherited the IRA in 2020 or later.

There are some exceptions if an heir is disabled, chronically ill or not more than 10 years younger than the IRA owner, says Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting. These “eligible designated beneficiaries” can use the old stretch rules, as can spouses. Minor children of the IRA owner can put off withdrawals until age 21. At that point, the 10-year rule applies.

If you had a potential heir who qualifies, you could consider naming them as the beneficiary of a traditional IRA and leaving the Roth money to the other heirs. (The IRA withdrawals will be taxable while the Roth withdrawals won’t.) Or you could leave the IRA to the children in lower tax brackets and the Roth to those in higher tax brackets.

If you’re trying to divide your estate equally, though, these approaches could vastly complicate matters because the balances in the various accounts could be quite different. Plus, predicting anyone’s future tax brackets can be tough.

Another approach is to name your children along with your spouse as the primary beneficiary of your IRA. That way, the children would get 10 years to spend down this first chunk of your IRA money after you die. When your survivor dies, they would get another 10 years to spend down the remainder, giving them 20 years of tax-deferred growth.

Alternately, you could focus on spending down the IRA to preserve other assets for your kids. The stretch IRA rules encouraged people to preserve their IRAs, but now it may make more sense to focus on passing down assets such as stock or real estate that would get a valuable “step up” in tax basis at your death.

Converting IRAs to Roths is another potential strategy for those willing and able. In essence, you’re paying the tax bill now so your heirs won’t have to pay taxes later (although they’ll still have to drain the account within 10 years). It may be possible to do partial conversions over several years to avoid getting pushed into the next tax bracket.

There are a few other approaches that involve costs and tradeoffs, such as setting up a charitable remainder trust that can provide beneficiaries with income. These are best discussed with an estate planning attorney who can assess your situation and give you individualized advice.

Filed Under: Inheritance, Q&A, Retirement Savings Tagged With: inherited IRA, IRA, q&a, retirement savings

Q&A: Figuring taxes on Social Security

April 11, 2022 By Liz Weston

Dear Liz: How will our Social Security payments be affected by any passive income such as from rental properties? We have two properties, which add $3,000 monthly to our current income. I plan on retiring at 72, which is six years away. My husband may retire earlier due to health problems. We will have savings as well as my 401(k) when I retire. Although my retirement income “pencils out,” I don’t know exactly what to expect from Social Security. How should I calculate my net income in retirement?

Answer: You could pay income taxes on up to 85% of your Social Security benefits if you have other taxable income. Examples of taxable income include wages, interest, dividends, capital gains, rent, royalties, annuities, pension payments and distributions from retirement accounts other than Roths.

To determine how much of your benefit is taxable, you would first calculate your “combined income,” which consists of your adjusted gross income plus any nontaxable interest you receive plus half of your Social Security benefits. If you file a joint return, you typically would have to pay income tax on up to half of your benefits if your combined income fell between $32,000 and $44,000. If your combined income was more than $44,000, up to 85% of your benefits would be taxable.

Filed Under: Q&A, Social Security, Taxes Tagged With: q&a, Social Security, Taxes

Thursday’s need-to-know money news

April 7, 2022 By Liz Weston

Today’s top story: Spring clean your finances with some automation. Also in the news: Negotiating your COVID-19 hospital bills, what a tax holiday at the gas pump means for you, and how to prep for the financial hit of long COVID.

Spring-Clean Your Finances With Some Automation
Automating paying bills and saving money can save time, but be strategic with your approach and check in regularly.

Can You Negotiate Your COVID-19 Hospital Bills?
Insurance companies have stopped waiving COVID-19 treatment costs, but there are ways to appeal a huge medical bill.

What a Tax Holiday at the Gas Pump Means for You
Several states are suspending gas taxes, but not everyone agrees it’s the right move.

How to prepare for the financial hit of long COVID
As much as the virus attacks the body – it can also attack your financial life.

Filed Under: Liz's Blog Tagged With: COVID medical bills, financial spring cleaning, gas tax holiday, long COVID

Wednesday’s need-to-know money news

April 6, 2022 By Liz Weston

Today’s top story: Student loan pause extended again. Also in the news: Booking rental cars in advance vs last minute, how to account for inflation in your 2022 travel budget, and how to split rent when some rooms are better than others.

Student Loan Pause Extended Again — Is There an End Game?
Federal student loan borrowers just got an extra four months before their payments resume.

Which Is Cheaper: Booking Rental Cars in Advance or Last Minute?
Our analysis shows that you could save around 15% by booking last minute.

How to Account for Inflation in Your 2022 Travel Budget
Look at past trips and line your travel spending habits up against current rates to budget for this year.

How to Split Rent When Some Rooms Are Better Than Others
Are you ready to outbid your roommates to secure the best room in the house?

Filed Under: Liz's Blog Tagged With: inflation and travel, rent-splitting, rental car costs, student loans payment pause

Tuesday’s need-to-know money news

April 5, 2022 By Liz Weston

Today’s top story: Spring-clean your finances with some automation. Also in the news: How millennials can take their money to the next level, the latest scams targeting taxpayers, and which airline has the best rewards.

Spring-clean finances with some automation
Consider these strategies from financial experts.

Millennial Money: Take your money to the next level
It’s time for your money management to grow up a bit.

Tax Season Is Here Again, and So Are the Scams Targeting Taxpayers
The latest scams, and how to protect yourself.

Who has the best airline rewards?
Deciphering what your miles are worth.

Filed Under: Liz's Blog Tagged With: airline rewards, financial spring cleaning, millennials and money, tax scams

  • « Go to Previous Page
  • Page 1
  • Interim pages omitted …
  • Page 126
  • Page 127
  • Page 128
  • Page 129
  • Page 130
  • Interim pages omitted …
  • Page 782
  • Go to Next Page »

Primary Sidebar

Search

Copyright © 2025 · Ask Liz Weston 2.0 On Genesis Framework · WordPress · Log in