How does the “still working exception” for RMDs (required minimum distributions) apply to 403(b) plans for retired teachers who work occasionally as substitute teachers?

“Still working” means you have not retired from the position in which you were covered by the 403(b) plan. If you retire from a teaching position and continue to work for the school as an occasional substitute teacher, you are no longer contributing to the 403(b) plan, and thus you are considered retired.

Check with your retirement plan administrator to be sure but, if you have signed official retirement papers and are collecting a retirement pension, you are probably considered …

Who is exempt from paying the FICA tax in the United States?

FICA stands for Federal Insurance Contributions Act. FICA consists of two separate payroll taxes: Social Security (6.2% of pay) and Medicare (1.45% of pay), for a total of 7.65%. This is paid equally by workers and their employers, for a total of 15.3% of pay (7.65% x 2).

In the case of self-employed workers and independent contractors, they pay the full 15.3% tax as self-employment taxes on Schedule SE that is filed with their tax return. Almost all employed and …

Due to circumstances beyond my control, my Required Minimum Distribution (RMD) was not withdrawn until early January. What is the procedure I need to follow in such a case?

The deadline date for Required Minimum Distributions (RMD) is December 31 of each year except for your first RMD. You generally have until April 1 of the year following the calendar year that you turn 70½ to take your first RMD. You can withdraw your RMD in one lump sum or make periodic withdrawals throughout the year. Failure to make RMD withdrawals triggers an excess accumulation tax. The tax is 50 percent of the required distribution that you didn’t take.…

What were Traditional IRA and Roth IRA Contribution Limits in the Past?

IRAs were established by legislation passed in 1974. Traditional individual retirement accounts (IRAs) first became available in 1975. Anyone with earned income can make the maximum traditional IRA contribution as long as they had at least that much income in a given year. A non-working spouse can establish his/her own traditional IRA if the earned income of the working spouse equals or exceeds the total contributions to both partners’ IRAs.

IRA maximum contribution limits have increased over the years. They

How do you determine your required minimum distribution (RMD) from retirement savings plans?

Follow these five steps to calculate your RMD:

1. Determine the distribution year. The account balance used to compute the RMD is based on the balance in a person’s retirement account on December 31 of the previous tax year.

2. Calculate the account balance. Gather statements with information about the balances in retirement accounts. An exception is Roth IRAs, where withdrawals are tax free if an account has been open for at least five years. IRA accounts can be combined …

What factors should I consider in choosing a house and location for retirement?

Finding housing for retirement is an important component of planning for your future because housing costs are usually the largest and most expensive portion of a family’s budget. Rather than waiting to move to a new location after you retire, consider moving to your ideal location while you are still working.

Whether you stay in the same place or move, whatever you do will be more successful if you take time to think and do research. Everyone has similar basic …

What is the Required Minimum Distribution (RMD) Rule for Tax-Deferred Retirement Plans Like IRAs and 401(k)s?

“RMD” is an abbreviation for “required minimum distribution.” This is the amount of money that retirees age 70½ and older are required to withdraw from their tax-deferred plans such as IRAs and 401(k) and 403(b) plans. RMD rules are serious business. The penalty for not withdrawing the proper amount is a 50% excise tax on the amount not distributed as required.

For example, if you don’t withdraw a required $1,000 from your traditional IRA or tax-deferred employer plan, the tax …

Can Workers’ Income Reduce Their Spouse’s Social Security?

No. The earnings limit ($16,920 in 2017 for beneficiaries who are age 62 through full retirement age) applies only to the income of the person who is collecting a monthly Social Security benefit check. It is that person’s income that determines whether benefits are reduced. One dollar in benefits is withheld for every $2 in earnings above the earnings limit amount.

Where a working spouse’s income will have an effect, however, is in the taxation of Social Security benefits if …