Be creative when withdrawing from retirement accounts
Like many people, you may spend decades putting money into your IRA and your 401(k) or similar employer-sponsored retirement plan. But eventually you will want to take this money out – if you must start withdrawing some of it. How can you make the best use of these funds? To begin with, here’s some background: When you turn 70-1/2, you need to start withdrawals – called required minimum distributions, or RMDs – from your traditional IRA and your 401(k) or similar employer-sponsored retirement plan, such as a 457(b) or 403(b). (A Roth IRA is not subject to these rules; you can essentially keep your account intact for as long as you like.) You can take more than the RMD, but if you don’t take at least the minimum (which is based on your account balance and your life expectancy), you’ll generally be taxed at 50% of the amount you should have taken – so don’t forget these withdrawals. Here, then, is the question: What should you do with the RMDs? If you need the entire amount to help support your lifestyle, there’s no issue – you take the money and use it. But what if you don’t need it all? Keeping in mind that the withdrawals are generally fully taxable at your personal income tax rate, are there some particularly smart ways in which you can use the money to help your family or, possibly, a charitable organization? Here are a few suggestions: Help your grown children with their retirement accounts. Your grown children may not always be able to afford to “max out” on their IRAs. You might want to help them with any excess funds from your own retirement accounts. You can give $15,000 per year, per recipient, without incurring any gift taxes – an amount far higher than the current annual IRA contribution limit of $6,000 (or $7,000 for individuals 50 or older). Help your grandchildren pay for college. You might want to contribute to an investment specifically designed to build assets for college. A financial professional can help you choose which investments might be most appropriate. Of course, if your grandchildren are already in college, you are free to simply write a check to the school to help cover tuition and other expenses. Help support a charitable organization. Due to recent changes in tax laws, many individuals now claim a standard deduction, rather than itemizing. As a result, there’s less of an incentive, from a tax standpoint, for people to contribute to charitable organizations. But if you’d still like to support a charitable group and gain potential tax benefits, you might want to consider moving some, or all, of your required distributions from your IRA to a charity. You can transfer up to $100,000 from your IRA in this type of qualified charitable distribution, thus meeting your RMD requirements without adding to your taxable income. Furthermore, this move might keep you in a lower tax bracket. (Before making this transfer, though, you will need to consult with your tax advisor.) Your RMDs can contribute greatly to your retirement income, but, as we’ve seen, they can do even more than that – so use them wisely. This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.
What to know before hitting the woods
Hunting season has officially arrived in Michigan and hunters across the state are itching to hit the woods. But before heading out to the blind, I’d like to remind everyone about the new rules established by the Natural Resource Commission (NRC) that restrict deer baiting in the Lower Peninsula and offer my thoughts on how to amend these rules for future hunting seasons. As the result of a single deer testing positive for Chronic Waste Disease (CWD), the NRC issued a permanent, statewide ban on deer baiting south of the bridge. The current baiting and feeding rules, along with guidelines for obtaining exceptions can be found on the Department of Natural Resources website. I agree with those who say the NRC overstepped when it issued the baiting ban. This ban will impair both state and local economies, while also negatively impacting hunters invested in our land and our game populations. Issuing a baiting ban takes away the state’s best countermeasure – avid hunters. Handicapping hunter’s ability to successfully harvest only allows deer populations to rise, worsening all sorts of wildlife health issues – including CWD. This extreme approach of banning the long-standing practice of baiting and feeding of deer hurts our local hunters, tourism, and jeopardizes the $2.3 billion hunting contributes to Michigan’s economy annually. Hunters are vital to aiding the state in managing its wildlife, and they do so with real actions and real results. We must take the strain off this industry and take a moment to reset and learn more about this disease. As your voice in Lansing, I am committed to supporting legislation rolling back the statewide deer baiting ban, conserving our state’s precious natural resources. You can go to www.michigan.gov/dnr and click Managing Your Resources followed by Rules, Laws and Enforcement, then Baiting and Feeding.
Jobs for Michigan’s Graduates program hit hard by governor
During the lost decade, Michigan was losing more people to other states than it was attracting new people to live and work here. Part of what has helped our state to rebound so strongly from that economic downturn was focusing on empowering students, for whom a traditional four-year college may not be the best option. For the past 10 years, a program that I have long supported — Jobs for Michigan’s Graduates — has been effectively serving our state, assisting at-risk youth who need more guidance than an average student to graduate and become work-ready. Last year in Southwest Michigan, 308 students completed the program. On average, in our part of the state, 99% of participants graduate from high school, 71% get a job, and 51% move on to obtain further education. Jobs for Michigan’s Graduates has been a huge success. Historically, the program has received state funding through the budget. This funding has always received broad bipartisan support. This year’s budget was no different; $3.75 million was appropriated for at-risk youth. Unfortunately, Gov. Whitmer took every cent of that funding through a questionable administrative transfer process, leaving nearly 4,000 students and their teachers wondering what will happen. With classes well underway, the program will run out of money sometime next month without this vital budget funding. If the money is not restored, programs will begin to close at locations throughout the state, including in much-needed areas like Benton Harbor, Flint and Detroit. The governor’s choice to punish students, seniors, the vulnerable and veterans with her budget games is as sad as it is regrettable. If the governor’s senseless tactics anger you, I encourage you to contact her office and let her know by calling 517-335-7858. As always, residents can contact my office with any state or local issues by calling (517) 373-6960 or emailing firstname.lastname@example.org.
Lead poisoning prevention
Unfortunately, hundreds of thousands of children living in the United States have elevated blood lead levels that may damage their health. They can develop behavior and learning problems such as hyperactivity, slowed growth, hearing problems, and aggressive patterns of behavior. Stopping a child’s exposure to lead from leaded paint, house dust, or any other source is the best way to prevent the harmful effects of lead. To raise awareness of the consequences of lead poisoning among parents and caregivers, especially those who live in homes built before 1978, the Berrien County Health Department is recognizing National Lead Poisoning Prevention Week. This awareness effort underscores the importance of testing your home, testing your child, and learning how to prevent lead poisoning’s serious health effects. Parents can reduce a child’s exposure to lead and prevent lead poisoning in many ways. Here are some simple things you can do to help protect your family: Get your home tested – If you live in a home built before 1978, you may want to consider getting a lead inspection. Get your child tested – If you suspect your child might be exposed to lead, talk to your doctor or local health department about lead testing. The Michigan Department of Health and Human Services (MDHHS) covers testing for children on Medicaid, and local health departments offer lead testing for free for all children. Get the facts – For more information, contact the MDHHS Michigan Childhood Lead Poisoning Prevention Program by visiting www.michigan.gov/lead or for more information locally, visit www.bchdmi.org.
Join us for ‘Academy Day’
This Saturday, October 19, my office will be hosting an ‘Academy Day’ event on Western Michigan University’s campus to showcase the opportunities offered by the United States service academies, including the U.S. Air Force Academy, U.S. Merchant Marine Academy, U.S. Military Academy, and the U.S. Naval Academy. I encourage all high school students in Michigan’s sixth congressional district to consider coming by to learn more about the process for applying. Admittance to one of our nation’s service academies is competitive and the rigor of these programs is challenging. These institutions will equip you with real-world and applicable skills. You will graduate ready to serve as an officer in one of the branches of our armed forces, leading great Americans across the world.
Our Academy Day event will be at Western Michigan’s College of Health and Human Services Room 4010 from 9 a.m. – 12 noon this coming Saturday, October 19 where students, parents, and educators can learn more about the nomination process and meet admission’s staff. Choosing to serve our nation is such an honorable decision, and I take such pride in nominating local students to attend our country’s service academies. My office is ready to answer any questions that students or their families might have.
To learn more about other important legislative issues, follow me on Twitter at @RepFredUpton or visit my website: upton.house.gov. You can also call my offices in Kalamazoo (269-385-0039), St. Joseph / Benton Harbor (269-982-1986), or Washington, D.C. (202-225-3761).