It ain't no lie. Bob Dylan has sold his immense collection of songs. The financial details were not disclosed, but most commentators estimate the deal is worth hundreds of millions of dollars. While one song Dylan did not write was “Taxman” (that was George Harrison), he may have been thinking about that when deciding to go through with this sale. (While “Johnny’s in the basement mixing up the medicine,” Dylan was “on the pavement thinking about the government.”)
Individual retirement accounts have strict rules for depositing and withdrawing money. But there are exceptions, and one of them is attracting attention these days—“substantially equal periodic payments.”
Often referred to as 72(t) plans, this option allows those under the age of 59½ to withdraw funds early from their traditional IRA accounts, for any reason, without paying the usual early-withdrawal penalty of 10% on top of the regular taxes.
“Make sure you commit to the payment plan,” says Sarah Brenner, Director of Retirement Education at Ed Slott & Co., a tax-consulting firm in Rockville Centre, N.Y. “You really need to be sure you want to be locked into the payment plan for a long duration.”
Time’s running out on coronavirus-related distributions. CRDs were created under the CARES Act but only for 2020 — technically only through Dec. 30. These are distributions that can be taken from an individual retirement account or company retirement plan by affected individuals, generally due to illness or loss of income resulting from the COVID pandemic.
Ed Slott, the Rockville Centre, New York-based CPA, editor of the newsletter Ed Slott’s IRA Advisor, and author of “The New Retirement Savings Time Bomb” (Penguin Books), to be released in March, recently talked to ThinkAdvisor with some advice about how tax law changes. Here are excerpts from our interview:
With jobs to hold down, children to care for, friendships to maintain, food to be bought and cooked, dishes to be washed and laundry to be done, it can be a challenge to keep up with all the details of your personal finances.
In passing, you may wonder: How many more months until my car loan is paid off? Or, before bed, you may get a jolt of anxiety about whether you’ll ever be able to retire.