Retirement Withdrawal Strategies: 4% Rule vs The Bucket Method

One of the most nerve-wracking aspects of nearing retirement is the prospect of possibly running out of money in your golden years. Even if you have been the most diligent of savers, mismanaging your withdrawal of retirement income could have disastrous consequences. There are two main strategies for retirement income withdrawal: systematic withdrawal and bucket withdrawal. It pays to understand the pros and cons of each of these … [Read more...]

What is the Minimum Income to File Taxes in 2020?

  It's that time of year when people begin wondering whether they need to file a federal income tax return. When in doubt, I say go ahead and file! (Your 2019 tax returns are due on April 15, 2020, and we recommend TurboTax because it's 100% free to file for most people). But, when making a decision this important, you probably want some hard numbers, so I'm going to give them to you.  Here's the quick and … [Read more...]

Should I Rollover My 401k?

Every day someone leaves a job and asks, "should I rollover my 401k?" Most of the time, the answer is yes. If you recently left a job, you should probably rollover your 401k. But there is more than one way to answer this question if you look at it closer. The answer really depends on where you are rolling over that 401k to. There are many places to put your old 401k funds. You could roll it over into your checking account, a new 401k, a rollover IRA, or even … [Read more...]

9 Smart Ways to Spend Your Tax Refund

The April tax deadline will be here before you know it. Since you aren't living on this money on a day to day basis, this windfall can be used to better your situation.  Overall, I like to see people use their tax return to get ahead. This is a great time to build up your emergency fund, get out of debt, or put towards long term savings.  Related: How Long Will it Take to Get Your Tax Refund What to Do With Your Tax … [Read more...]

Stay Out of the 401k Penalty Box

Just like in hockey, there can be penalties with your 401(k). High sticking in the NHL will get you a minimum 2 minutes in the penalty box. Same rules apply for cross-checking. In more severe cases, the penalty can be doubled that. The bright side to all that is after the penalty time expires, you are allowed back on the ice to play again. Hopefully, with no harm to the team. In retirement planning, this is often not the case, especially when it comes to your … [Read more...]

Roth IRA Rules

The late Senator William V. Roth, Jr. It's beneficial to periodically review the Roth IRA rules to encourage you to save for your retirement and to ensure we're not missing any key pieces of information. Before we dive into the rules, let's look at some Roth IRA basics. What is a Roth IRA? Senator William Roth of Delaware would be proud. We're still loving his Roth IRA. The investments inside the account may have taken a hit, but the idea behind the account … [Read more...]

9 Badass States Without State Income Taxes (and How They Get Away with It)

As the federal tax filing deadline looms closer and closer, many people are starting their federal tax returns. For most, a state income tax return is due as well. Most states have a personal state income tax. But even the few that don't impose a state income tax, often have other ways of making up that revenue.  States Without State Income Taxes Here is a list of states that do not impose income … [Read more...]

Do I Have to Pay a Tax on Unemployment Compensation?

Do I have to pay a tax on unemployment compensation? The IRS isn't about to let the fact that you don't have a job stop it from collecting taxes from you. You are required to pay taxes on any income received. That includes the income you receive in the form of unemployment compensation. And, of course, if you were employed for part of the year, you will have to pay income taxes on that money as well. The good news is that your employer likely automatically … [Read more...]

How to Fill Out a W-4 Form (Without Errors that Would Cost You)

Think you know how to fill out a W-4 Form like the back of your hand? You may need to think again. The W-4 Form has changed significantly in 2020, it's first major revamp in 30 years. The changes are meant to make the form more straight forward and accurate. But your first time filling it out could still be confusing, especially if you've been using the old form for years. The W-4 Form tells your employer how much tax should be … [Read more...]

How to Rollover a 401k to an IRA

Leaving your corporate gig can be a good or bad thing depending on your particular situation. One thing though that's usually a positive when this happens is that you get to move your 401K funds into an IRA. The 401K rollover to IRA, sometimes called a 401k IRA rollover or 401K to Rollover IRA is a common move people make when they leave their job. If you've been fired or you quit your job, you have the option to roll your 401K funds over into what's known as a … [Read more...]

(Don’t Risk It!) Get a Quality CPA to Prepare Your Taxes

I used to work in a CPA firm back in my 20s. Filing taxes was a part of the annual routine. Lately, I've been thinking about the many advantages of having a CPA do your taxes. Below, I'm going to share my thoughts with you about why it matters, and for whom. Do You Need a CPA to Prepare Taxes? The answer to this question is ... maybe. There are some cases (like when you have a super-simple return) that the services of a CPA might … [Read more...]

403(b) Rollover to a Traditional IRA

I recently helped Mrs. PT complete a 403(b) rollover to a traditional IRA. A rollover is simply taking funds from one retirement account and transferring them to another without suffering any tax consequences. This is typically done when you leave a job. The rules for the 401(k) rollover are very similar, if not identical, but I have recent experience with my wife's 403(b). So that's what I'll cover here: 403b rollover rules. In this post I'll share the details … [Read more...]