Tag Archive for: taxes

When to start saving for Retirement

The Importance of Saving for Retirement at a Young Age

If you’re an adult in your 20s, you are entering an exciting stage of life. Whether you’ve just graduated from college or are starting a new career, you will encounter many opportunities and challenges as you create a life of your own.

As busy as you are, it’s no surprise that retirement may seem a long way off, especially if you’re just entering the workforce. What you may not realize, however, is that there are four very important advantages to begin planning and saving for retirement now.

1. Money management skills

Now that you’re out on your own, it’s important to start taking responsibility for your finances little by little. Part of developing financial responsibility is learning to balance future monetary needs with present expenses. Sometimes that means saving for a short-term goal (for example, buying a new car) and a … Read More

Medtronic’s Acquisition Causes Anxiety Among Shareholders

Medtronic, the world’s largest medical technologies company, recently made headlines when the Minneapolis-based company bought the Irish healthcare products company, Covidien, for nearly $43 billion.

The purchase, according to Medtronic executives, will enable the company to invest more aggressively, cut back taxes drastically, and thus create a bigger profit for shareholders—but the investors themselves have not been so quick to celebrate.

See, Medtronic allowed the foreign company to keep a 20% stake in the merger in order to keep the majority of its profits overseas free from American taxes. This move, called an inversion, qualifies as a “taxable event,” and the company’s shareholders are the ones left with the bill—as much as 33 cents on the dollar.

Medtronic urges shareholders, especially individuals, to remain patient as the long-term benefits of the recent acquisition begin to emerge. But this promise hasn’t satisfied everyone. The repercussions of this transaction are complicated, and many … Read More

Dipping into an IRA without Paying a Penalty

 

Typically, withdrawing from a traditional IRA before you reach 59 ½ will earn you a 10% penalty fee, and for good reason—that money is tucked away for retirement, and anything you withdraw loses its ability to make investment gains before you reach a ripe age. In some ways the IRS penalty policy on early withdrawals is meant as a slap on the wrist to steer you from temptation that may jeopardize your financial future.

But life is often unpredictable, and sometimes you need to tap your non-Roth IRA early. Luckily, there are a number of exceptions to the 10% penalty rule.

Many life emergencies allow for an exception:

* If you become permanently disabled and are unable to do substantial gainful activity, you can tap your IRA with no worries about fees.

* High medical bills can be paid with IRA withdrawals if the expenses are not reimbursed by insurance … Read More