Latest news with #LauraSaunders
Yahoo
08-04-2025
- Health
- Yahoo
Stress Awareness Month: What you can do to manage it
HARTFORD, Conn. (WTNH) — This April, in recognition of stress awareness month, we're shining a light on the impact stress has on our lives and what you can do to manage it. Laura Saunders, psychologist and director of the Center of Gender Health at Hartford HealthCare, joined Good Morning Connecticut at 9 a.m. to discuss. Watch the video above to learn more. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Wall Street Journal
04-03-2025
- Business
- Wall Street Journal
Tax Season 2025: A Cheat Sheet for Retirees and Retirement Accounts - Your Money Briefing
This transcript was prepared by a transcription service. This version may not be in its final form and may be updated. Ariana Aspuru: Here's Your Money Briefing for Tuesday, March 4th. I'm Ariana Aspuru for The Wall Street Journal. Congress has set up a variety of tax-friendly accounts to encourage saving for retirement. While they offer plenty of benefits, it's important to be aware of the potential pitfalls. Laura Saunders: If the money comes out of a traditional account, you'll owe tax on it in general. Also, if you're under 59 and a half, you probably will owe a 10% penalty, but not always, so it's important to check on that and strategize. Ariana Aspuru: We'll talk to Wall Street Journal reporter Laura Saunders about her latest guide to taxes for retirees or retirement account holders after the break. Tax season for retirees and people holding retirement accounts means paying attention to when and how you contribute and withdraw money from them. Wall Street Journal reporter Laura Saunders joins me. Laura, before we dive into the tax benefits and pitfalls that filers need to be aware of this year, let's do a little refresher on the main types of retirement savings accounts. What are they? Laura Saunders: The main types are two branches of the same tree. One is 401(k)s and 403(b)s and plans like that. Those are employer sponsored plans and they might have an employer match, so that's always a good thing to get. Now, separately, there are IRAs, and IRAs are individually owned and you put money in if you're eligible and you take money out. But there are overlapping rules like in both cases you probably don't have access to a lot of the money unless you're 59 and a half or older. Ariana Aspuru: And what influences why someone would choose 401(k) over an IRA? Laura Saunders: It's often eligibility. Now, if your employer offers a match with the 401(k) and you have access to the 401(k) and the match, that would be a slam dunk. On the other hand, if you're an 18-year-old kid and you've got your first summer job as a lifeguard and maybe you have a great-grandparent who wants to match your savings, you would put it into an IRA. With traditional accounts, the money goes in pre-tax, so you get a really nice sometimes very fat tax deduction for putting that money in and the money grows tax-free. But on the other end, when it comes out, it's all ordinary income. It will be taxed at the same rate as your wages, and you have to start taking it out when you're 73. Now with Roth IRAs and 401(k)s, the money goes in after tax dollars. You pay tax on the front end, and that's a little more painful because you don't get the nice. On the other hand, it grows tax-free and then it can come out tax-free. Ariana Aspuru: If you have money saved in a traditional IRA count and want to transfer it to a Roth one, what's the most tax-efficient way to do that? Laura Saunders: It's not especially tax-efficient because you have to pay tax on the conversion. You take it out, you roll it into a Roth IRA and you pay tax at ordinary income rates. And if you're already paying tax on your earnings and things like that, it might push you into higher tax bracket. If you have a pause or a break like you are going back to school or you just got out of school and you started to earn, but your income is lower this year because you only worked for part of the year, or if you've just retired and your income is low, the lower your income at the time you convert, the lower your tax will likely be. Ariana Aspuru: When do you have to start withdrawing money from your retirement accounts? Laura Saunders: If you have traditional accounts, right now the law is 73, you pull out about 4% the first year, but it rises after that. If you are lucky enough to have a lot of income, it might raise taxes on other investment income, things like that. It's a thing to keep your eye on. It might be a reason to convert to Roth accounts. Ariana Aspuru: When you hear the words required minimum distributions, that's what we're talking about. Laura Saunders: That's what we're talking about. The IRA has a table for it and you look it up and every year you see what it is. And the value is the value on the last day of the year. That's how you figure out the withdrawal for the next year. Ariana Aspuru: What's the penalty for withdrawing early if you have to or you choose to? Laura Saunders: If the money comes out of a traditional account, you'll owe tax on it in general. Also, if you're under 59 and a half, you probably will owe a 10% penalty, but not always. So it's important to check on that and strategize. With Roths, it's somewhat different and I would say look up the rules, but the most important thing to know, and especially for young people, is that if you pull out Roth contributions at any time, you don't owe tax or penalty on them. The only downside is that you can't put them back, but let's have an example of this. Maybe there's a young person who's managed to put money into a Roth every year, and by age 30 she has built up 50, $60,000 in her Roth IRA of contributions. Now they're also earnings, but they're not as much as the contributions. If she wants to take that money out, say to go back to school or the down payment on a house, that can just come out with no problem. So a Roth IRA can make a great emergency savings account for true emergencies or long-term investments and things like that. Ariana Aspuru: In your cheat sheet for navigating taxes with retirement accounts, you mentioned how someone who inherits an IRA can gain access to the money in the account. What does that process entail? Laura Saunders: Generally, you have 10 years to take the money out. It cannot exist longer than 10 years if the person who left it to you died after 2019. If it's a Roth IRA, you don't have to take annual distributions. If it's a traditional IRA, you probably have to take some money out every year. And the thing to know there is that you may want to take out more than you're told to take out. If you're stuck taking out over half the money in the 10th year, it might push you into a higher tax bracket. So keep an eye on your taxes when you're taking these withdrawals. Ariana Aspuru: Donating money straight from your retirement account to charity can also be a highly efficient tax move. Why is that? Laura Saunders: For savers who have gotten a lot of money into traditional accounts, you can make your charitable contributions directly from the traditional IRA. It will count against your RMD and it will reduce your income. You won't get a tax deduction for it, but that might be better. It will reduce your AGI and it can reduce other taxes as well. If you switch your contributions from a cash account to these so-called qualified charitable distributions, these are called QCDs, it could benefit you. You could even get a charitable tax break while you're taking the so-called standard deduction. Ariana Aspuru: That's WSJ Reporter Laura Saunders, and that's it for Your Money Briefing. This episode was produced by Zoe Kuhlkin with supervising producer Melony Roy. I'm Ariana Aspuru for The Wall Street Journal. Thanks for listening.
