Financial Planning

Savings Rates for Retirement

As you plan for retirement, there are a few items that may get a larger amount of your attention as you try to fit everything into place. Things like your ideal retirement date, investment performance, and predicted retirement budget are likely some of the top considerations that come to mind when you think of your retirement plans.

However, as you look toward your retirement, it’s important to remember an essential factor that sometimes gets pushed to the side: savings rates.


What is a Savings Rate?

According to Investopedia, a savings rate “is a measurement of the amount of money, expressed as a percentage or ratio, that a person deducts from his disposable personal income to set aside as a nest egg or for retirement”. The amount you save will generally goes directly into various savings vehicles such as your bank account, 401(k), IRA, and taxable investment accounts so that when you ultimately retire you have accumulated enough money to pay for your future living expenses.

What Savings Rate Should I Aim For?

There are lots of rules of thumb regarding savings rates. How much you need to save is often a reflection on the type of lifestyle you want to live, your current age, your current assets, and your remaining time to retirement. Unfortunately, these generic rules sometimes lead to generic recommendations that may or may not suit your needs.

You may have seen figures of the “ideal” percentage that investors should aim for when saving for retirement, but these recommendations are certainly not ideal for everyone. Depending on your age and personal income, this percentage could vary. It’s important to find the figure that works for your lifestyle, this year and in years to come.

Younger individuals with more time to work and save will often need to set less money aside, as a percentage, annually than older individuals who are coming up on their retirement years. For those close to retirement age and without significant existing savings, a more aggressive saving rate may be ideal.

Additionally, individuals with particularly high annual income may find that they need to set aside yearly savings at a higher rate than those with lower incomes, if they desire to maintain a similar standard of living into their retirement years. Again, this can vary, depending on whether existing savings or outside payouts are at play.

What Else Should I Consider?

As with the other factors playing into retirement planning, it’s important not to view savings rates in isolation. Focusing too hard on this one part of the puzzle could leave you open to making poor decisions regarding other components of your retirement plan.

Ultimately, you want to consider your personal savings rate as one of the tools that will help you to achieve the retirement lifestyle that you wish to live. Considerations of retirement age, location, standard of living, hobbies, healthcare needs, and more are important factors that make your individual retirement plan unique.

If you plan to live a lifestyle fairly similar to the one you enjoy now, setting a dedicated portion of your annual income now can help you to fund your needs in the future. Savings rates are a helpful tool that can give you guidance in determining what amount of savings makes sense for your desired goals.

If you’d like to learn more about planning for your retirement, contact Jake Sturgill today for a consultation!

Expecting a Tax Return? Consider These 4 Ways to Use It

Depending on your withholdings, you might be in for a solid tax return from the 2019 tax season. Last year, the IRS returned $324 billion to taxpayers with the average tax return at about $2,900. Before those funds arrive in your account, consider these options to help your tax return work for you.

First: Revisit Your Financial Plan

If you haven’t already, consider checking in with your financial advisor before you make any plans for your returned funds. Your check in should be a good reminder of your established financial goals and should also help you to ascertain that your existing plans are on track to meet those goals.

Once you know where you stand with your financial planning, you can set your mind to other financial goals or even to a fun expenditure or two.

Option 1: Add to existing savings accounts 

Tax-smart investment accounts can include IRAs, HSAs, and 529 plans. You may find that the extra thousand or more that comes in the form of a tax return can provide a nice boost to one of your savings plans.

Or maybe this you’re ready to open a new savings account. Favorable annual percentage rates (APY) could be an opportunity to open a new account with your tax return.

Your financial advisor can help you to understand rates and provide guidance on choosing an account that might work for your savings goals. Depending on the minimum balance requirements and accessibility and your own desires and needs, you might find that a new savings account with a high APY is a smart way to use that extra cash. 

Option 2: Invest

If you’re looking to make money with your money, investing your tax return may be an option to consider. Stocks, savings bonds, and interest bearing accounts are some ideas for investing your tax return, each with different benefits that will change depending on your specific financial situation.

Whether you have a robust investment portfolio or are interested in diversifying your investments, you may find that investing your tax return is a viable idea for your financial planning. Your financial advisor can provide more information about investment options and whether or not they’re a good fit for your tax return spending.

Option 3: Give

The season of giving may be over, but giving to charity and family is always an option for those looking to be tax-smart and feel good about how they spend their money. This can potentially serve as an addition to the charitable donation deductions you claim on the next year’s taxes, but it also gives that warm, fuzzy feeling that comes with helping a cause you care about. 

Option 4: Invest in Personal Development

Attending a class, whether for recreation or to become more qualified in your field, or starting a side business, could be a unique way to invest in your future. Though you’d be spending your tax return rather than saving it, personal development usually isn’t considered frivolous spending. If you’ve been waiting for a time to invest some cash in a personal project, this tax return season may be the time to do so.

Choosing an Option

Regardless of the amount of money you received in your tax return and your financial status, consider having a conversation with your advisor about your financial plan and how your tax return may or may not play into it. If you want to learn more about investing, our CFP® professionals at Puckett & Sturgill Financial Group would love to have a look at your unique situation and discuss the possible options for using your tax return this year.

Stock investing involves risk including loss of principal. 

Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax. 

Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such states’s qualified tuition program.  Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing. 

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio.  Diversification does not protect against market risk.

3 Career Transition Options to Consider

Going from full-time employment to retirement is a major transition, both personally and professionally. With modern life expectancies and new medical breakthroughs every year, statistically speaking, you may look forward to a longer retirement than any previous generation.

But with that extended retirement come some challenging questions: How much do I need to save for an extra 5-10 years of retirement? Will I get bored of early-bird specials and parcheesi every day for 25 or more years?

For many retirees, a planned career transition that extends the working years by some measure into the retirement period makes sense both personally and financially. After all, a job can be about so much more than the paycheck. Working as you transition to, or even during, retirement can provide fulfillment and allow you professional flexibility that suits your changing lifestyle.

Here are a few career transition options you might consider:

Part-Time Employment

Transitioning from your full-time job to retirement may be as simple as paring down your role as a full-time employee and taking on certain responsibilities as a part-time one. If you appreciate the benefits at your current job or love your company’s mission, it may be worthwhile to explore what a part-time employment option might look like.

On the other hand, you may want to look at part-time employment in an entirely different field. If you’re eager to escape office life but want a steady paycheck that will keep you from dipping too far into your savings, look into part- or flex-time jobs in your community.


Have an old idea that refuses to let go? Maybe your retirement transitional period is the time to flex your entrepreneurial muscle and see what happens.

Whether your new time flexibility allows you to spend more time turning a beloved craft into a full-fledged artisan brand or you want to chronicle your retirement travels on a monetized blog, there are endless options for exploring entrepreneurship during your retirement. If you plan carefully, you may even be able to supplement some of your retirement income needs with income from your small business.


Many retired professionals find themselves facing retirement with not only too much time on their hands, but too much knowledge that simply has no outlet. If you want to put your years of industry knowledge to good use, you may consider consulting or coaching.

Business consultants have the ability to control their schedules by choosing which projects to take and how many they want to take on during a year. They can also command a decent hourly or per-project rate that can offset retirement expenses and help to support a robust retirement lifestyle. If you have already have people asking you for advice during your spare time or have unique skills to offer to the next generation, consulting might be a worthwhile career transition option.

When considering a career transition option, it’s important to look at the big picture: where do you see yourself in your retirement years? While an extra paycheck might be nice, if the idea of working during your retirement or postponing full-fledged retirement as you phase out of the career world makes you uneasy, then you may want to consider other ways to meet your retirement ideals.

As always, when piecing together the unique components of your retirement, it’s important to consult your financial advisor. They can provide insight to your retirement budget, feasibility of retirement dates, and ways to fill financial gaps in your retirement plan.

To get started with your personalized retirement plan, contact Jake Sturgill today for a consultation!

Ask an Advisor – Nonqualified deferred compensation

Different parts of the retirement planning equation have different benefits and are better suited to some individuals than others. To understand which parts are more ideal for your planning, it’s important to understand how different plans work.

Today, we’re going to talk to advisor Paul Sorenson about nonqualified deferred compensation (NQDC) plans. He’ll tell us some of the important items to consider when looking at NQDC plans and how they might fit into an existing retirement plan.

What are NQDC plans?

Nonqualified deferred compensation plans (NQDC) are offered by employers to employees to set aside tax-deferred compensation to be paid out at a later date. For employees who maximize contributions to their current employer-sponsored retirement plans like a 401(k) or 403(b) an NQDC represents an opportunity to save more for a future goal or retirement in a tax-deferred manner. Not all employees have the chance to participate in an NQDC plan but if you have the opportunity, it may be worth looking into this benefit a look to see if it might have a place as a part of your financial plan.

Unlike other qualified employer-sponsored plans, such as a 401(k) or 403 (b), NQDC plans usually allow you to defer receiving a portion of your compensation over and above what is allowed into a qualified plan. When you elect to participate, you choose how much to defer to the plan and your employer then segregates the chosen potion of your salary into a trust which is invested on your behalf. Since the compensation is not paid to the employee currently it is not taxed until some future date when it is actually paid out to the employee. 

There are many reasons employers offer NQDC plans but among the most common are their ability to help retain and attract talented employees as well as helping high-earning employees save enough of their current compensation to meet future needs. Typically high-earning employees are unable to save enough in a pre-tax 401k or 403b account to meet their retirement goals in full.

NQDC participation: Some important items to consider

NQDC plans can vary widely depending on what your employer offers but here are general items to think about:

  1. Do I currently contribute the maximum to my current employer-sponsored qualified plan such as a 403(b) or 401k? If you do not maximize contributions to your qualified accounts, you may want to consider this option first, since these plans are tax-deferred and protected under the Employee Retirement Income Security Act (ERISA).
  2. Do I believe my employer is financially secure? Should your employer fall into bankruptcy, the funds in NQDC plans might be accessible to the organization’s creditors which could mean your deferred compensation might not be paid.
  3. Can I afford to set aside a portion of my compensation knowing that I won’t be able to access it until a date in the future? NQDC plans do not have loan provisions like other employer-sponsored plans, so accessing the compensation which has been set aside is not an option prior to the distribution date that has been set.
  4. How does participation in an NQDC plan fit with the rest of my financial plan? Every NQDC plan is different so it is important to understand the distribution options, investment options, vesting options and service requirements available to you and along with the risks. Once you understand these risks these details the NQDC should become a part of your full financial plan. 

Every NQDC plan is different and it is important to understand the details and risks of your employer’s plan before choosing to participate. For many, NQDC plans present a possible option to ramp up their savings for the future, but for others investing in accounts outside of their place of employment or combining multiple savings vehicles might be a better option.

No matter what you decide, working with a financial professional, like a CERTIFIED FINANCIAL PLANNER™ professional, who can help you understand the options and set a strategy to pursue your needs, wants and wishes for today and well into the future is a good place to start.

If you are trying to understand how an NQDC plan might fit into your financial picture or are just ready to get started with a well thought out financial plan, contact Paul Sorenson at Puckett & Sturgill Financial group today!

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material. 

Don’t Forget the Quantity – Quality Balance when Planning Your Retirement

Finding balance in your retirement planning goes beyond having a diversified portfolio or a monthly income number to match your projected budgets. After all, you’re probably not going to spend your entire retirement watching every penny come in and go out.

Yes, planning financially for retirement is crucial. However, planning for quality of life during retirement is an important aspect of retirement planning that is often overlooked.

As Americans prepare to live longer during retirement than previous generations did, you need to consider how the shift toward a longer life expectancy impacts your retirement as a whole. Are you planning for a quality retirement alongside the quantity of retirement savings you’d like to have in place?

Quality of life conversations contribute to the financial projection for retirement, since the type of retirement lifestyle you plan on is an essential aspect of the retirement budget. But beyond your weekly tee times or macrame classes, what are some other quality of life issues to focus on in retirement planning?


Your Location

Your retirement location contributes to many of the financial factors of your retirement plan. From tax rates to cost of living, you will need to factor in the cost of where you plan to retire.

If you don’t already live in the city or state to which you plan to retire, consider how a move will impact your financial situation. If you move sooner, are there benefits to be gained? How will a house sale factor into your financial plans, present and future?

Your financial advisor can provide insight into how these factors will contribute to your retirement planning and can provide advice on timing these steps.


Your Network

You’ve probably heard that having a solid support network of friends and family can make all the difference during your retirement years. And research supports the idea that individuals in community tend to live longer, happier lives than those who are isolated.

If you want to enjoy the quality of life associated with being in a community of people you care about, it’s time to start making those connections now. If you want to maintain close relationships with your siblings, children, and/or grandchildren, make it a point to foster those relationships right now.

For other connections, look into hobby groups, charitable organizations, and community groups that focus on something you care about and would like to make time for during your retirement years. For example, if you enjoy crafting and would like to spend your retirement making quilts for the homeless, try to find crafting groups or classes that will help you to hone your skills and meet others that share common goals.


Your Health

While longer life expectancy is good news for everyone, it’s important to consider how your health might fare during your extended retirement years. If you’re dealing with health issues, the quality of these extra years may not be as high as you’d like.

Of course, you certainly can’t look into a crystal ball and predict exactly what your health will do as you age, but there are steps that you can take now to improve your odds moving forward. For starters, you can work to prioritize your health now so that making healthy choices becomes habit.

Look into ways that you can adjust your diet or lifestyle to combat the likelihood of developing chronic conditions. And consider insurance options that will support your healthcare needs, should you require long-term care or care for a unique situation.

The consideration of retirement quality of life is an important one as you navigate the path toward retirement. For more information about developing a personalized plan to balance the quantity-quality factors in your retirement, contact Jake Sturgill for a consultation!

Ask an Advisor: What’s a CFP?


Jake: 00:10

Hi, I’m Jake Sturgill with Puckett and Sturgill Financial Group in our Ask an Advisor Series. Today I’m with David Hemler. David, one of the questions that we’re often asked, what’s a CFP, and why does that matter?

David: 00:23

Yes, it is a great question, and I take the time when I first meet with clients to educate them about the CFP letters. And so, CFP stands for certified financial planner professional. And it’s a designation, it’s awarded in recognition of an individual who was passed through a rigorous process that’s set forth by the CFP board of standards that outlines the four E’s that really kind of show the public what the CFP letters really entail for the individual who is using that credential.

David: 01:02

And the four E’s are, they stand for education, examination, experience and ethics. And so, the public can feel very confident when they’re working with an individual who has attained the CFP designation, that that person has competency in all the dynamic levels of financial planning. And so, they can feel very good about the person they’re working with has, actually has oversight, constant level of oversight to a rigorous body of education that they had to go through, as well as the examination and the experience levels that are required in order for us to use the designation in.

Jake: 01:46

So, it sounds like it’s really about taking more of a broader holistic approach, looking at everything and going above and beyond just having something to be able to sell you something.

David: 01:57

By all means the CFP professional is somebody who actually has spent at least a year of classroom work at the graduate level. And again, it encompasses a body of financial planning. We’re educated in many, many areas, estate planning, taxation, risk management, investment planning, all of the different dynamic approaches that are necessary in order for us to build sensible financial planning outcomes on behalf of our clients. And we’re very proud at Puckett and Sturgill to be five individuals who’ve given the dedication to ourselves to provide guidance to the folks that we meet with and our clients as a certified financial planner professionals.

Jake: 02:42

Differences do matter. And so, thank you for answering that question, David. And we welcome any future questions from our clients. So, please feel free to shoot us an email, give us a call, visit our website. We’ve got tons of great content there. We’re always just a phone call or email away.

It’s Your Turn to Ask

Ask an Advisor: What Do I Do With My 401k?


Paul Sorenson: 00:09

Hi, welcome to the Puckett and Sturgill Ask An Advisor segment. We’re glad you joined us. I’m Paul Sorenson, financial planner with Puckett and Sturgill Financial Group. I’m here today with David Hemler, certified financial planner professional. David, we’re here to ask today, and discuss, I have a 401k plan. This is one of the questions we get almost every day. I have a 401k plan. What do I do with my 401k plan? Can you help me?

David Hemler: 00:33

That’s a great question, and yes, we can help you. The first thing is to define, are we talking about a former employer plan or a current employer plan? For the former employer plan, you have four options there. Those options are to leave it with the current custodian. To withdrawal it, which is called a distribution. To roll it into your current employer, if that current employer plan offers roll ins, and many do. Or, move it to an IRA. That’s the four options with a former employer plan. With your current plan, the key ingredients for you to understand are what is the matching program so that you can fully gain access to 100% of the match that’s available to you. If there’s a match available, not every 401k has to offer you a match, so that’s an important piece of the summary plan description, which governs that, that you want to understand. And we can help you to discern through that, to get those types of answers on behalf of your plan. Getting 100% of the match, and also understanding your allocation and how it aligns to your risk acceptance and your time horizon for the goals that you have for those retirement assets.

Paul: 01:46

Great, great. I think that answers a lot of it. For a former plan, we’re looking at keeping it where it’s at, rolling it into another 401k plan, potentially diversifying it into an IRA. Those are all great options. I think that’s …

David: 02:02

A lot of complexity there too, so our best advice would be to talk to a professional advisor. Get some guidance before you make a final decision on an old employer plan.

Paul: 02:12

Great. That’s really helpful, David. Thank you so much. We look forward to hearing from you, should you have any additional questions, and please feel free to submit additional questions to us online.

It’s Your Turn to Ask

Ask an Advisor: Common Estate Planning Mistakes


Jacob Sturgill: 00:09

Welcome to Puckett and Sturgill Financial Group’s Ask An Advisor segment. I’m Jake Sturgill and today, I’m interviewing Deborah Williams about common estate planning mistakes we oftentimes see clients make.

Deborah Williams: 00:20

That’s right. We do, as partly because of what we, as advisors, what we help clients with. They will seek us out for help with estate planning. But I would say the first common mistake that I see a lot is not having any estate plan in place. There’s no will. There’s no living will, no power of attorney.

Jacob: 00:38

See that often.

Deborah: 00:39

Right. That’s easy for us to fix because we have relationships with attorneys, so we can put the client in touch with that attorney and then, they can draw up the legal documents that are needed and we can be involved in that plan and make sure that everything is coordinated so that assets will transfer as the decedent wishes.

Jacob: 00:59

Yeah, I think it’s really important to work as part of a team and utilize our network if clients don’t have existing relationships or if they have existing relationships, continue to work with their existing relationship and really integrate it as part of a holistic financial planning team.

Deborah: 01:15

Absolutely. That’s how we can avoid other mistakes. One of the easy things that we can do is make sure that beneficiaries are named on retirement plans or other accounts. Transfer on death beneficiaries are popular now. That’s another area that we see common mistakes happen, when there’s either a missing beneficiary or an out of date beneficiary, like an ex spouse.

Aaron: 01:12

Yeah. We want to see that they’re educated and that they are extremely competent.

Jacob: 01:39


Deborah: 01:40

That it was overlooked in the divorce and it was never removed.

Paul: 01:43

Sometimes the simplest things to fix can be pretty costly in the end. In the state of Maryland, if you don’t have a named beneficiary or don’t have your estate planning documents in order, it’s not you that is dictating, it’s the state of Maryland and other statutes.

Deborah: 02:00

Right. It’s the laws of the state that dictate where your assets go, which may not be what the decedent wished. If you have no beneficiary listed on your retirement plan, then your estate is assumed to be the beneficiary and if you have no will, then it would just be divvied up according to that state’s laws.

Jacob: 02:17

Exactly. Really great point. Thank you for going into more detail on that. If you have any questions, we’re here to help you. Please visit our website, send us an email or give us a call. We’re here to help.

It’s Your Turn to Ask

Tax Considerations for the Working Individual Reviewing 2018 Returns – Qualified Plans

When you’re planning your 2019 tax strategy, you’ll find a review of your 2018 return a helpful tool in determining your potential tax responsibility for this year. Many tax issues are covered in consideration of family issues, income, and investments, but if you have qualified plans, there are just a few more loose ends to wrap up during your tax review.

This article is third in a series on Tax Considerations for the Working Individual. Read of the series here:

  1. Tax Considerations for the Working Individual – Family and Filing Issues
  2. Tax Considerations for the Working Individual – Investment Income and Other Issues
  3. Tax Considerations for the Working Individual – Qualified Plan Issues


Here are some of the qualified plan issues you should consider:



Are You Contributing to a Traditional IRA?

If you’re actively contribution to a traditional IRA, bear in mind that the maximum contribution is $5,500 ($6,500 if you are above age 50). Consult Schedule 1, Line 32 for more information and ask your tax advisor for information about whether or not you can make any further deductible contributions.


Are You Contributing to a Roth IRA?

Similarly, Roth IRA contributions cap at $5,500 ($6,500 if you are above age 50) per year. However, unless you’re taking advantage of the Retirement Contribution Savings Credit, you will not report these contributions on Form 1040.


Do you Have an Inherited IRA?

If you have an inherited IRA (or multiple inherited IRAs), you need to ensure that you’re meeting your RMD for the year. Look to form 1040, Line 4a and 4b to see whether this has been satisfied and reported.


Are You Contributing to an HSA?

While you can deduct HSA contributions, you need to keep contribution caps in mind. For the individual, there is a $3,450 cap ($6,900 family). Additionally, if you contribute to your HSA through payroll, then you will find information about your lower wages on Form 1040, Line 1, as well as on your W-2 and paystubs.


Have You Made a Contribution to a Non-Deductible IRA?

If you have ever contributed to a non-deductible IRA, you will need to ensure that the cost basis is properly tracked. Look at Form 8606 to understand how your contribution should be accounted for.


Have You Taken a Non-Qualified Distributions from:


Early, non-qualified IRA distributions are penalized and you’ll see this when you file your taxes. To find a non-qualified early distribution, look at Form 1040, Line 4b. Then consult Form 5329 for penalty calculations and carry over to Schedule 4, Line 59.


A 529 Plan?

You will also use Form 5329 to calculate the penalty for an unqualified withdrawal from a 529 Plan, if applicable. Since a 529 Plan has very specific withdrawal requirements, you’ll want to work with a tax professional to understand whether any withdrawals you took were qualified or not.


Did You Convert a Traditional IRA to a Roth IRA?

If you converted an amount from a traditional IRA to a Roth IRA, you need to report this amount properly. Consult Form 8606 for more information about reporting the converted amount and that any non-deductible IRA contributions converted are treated as non-taxable.


Did You Rollover Funds from One Retirement Account to Another?

You may have moved funds from a 401(k) to an IRA or another account. If so, you want to treat these funds as a rollover and not a distribution, since a distribution may cause penalty and other unforeseen expenses. Form 1040, Line 4a should reflect the amount rolled over and Line 4b should be $0 if no distributions occurred.

These are only some of the considerations that you need to make as you review your 2018 tax return and prepare for the upcoming tax season. To learn more about tax considerations for the working individual, consult our resources on family and filing issues and reporting your investment income.

This article is third in a series on Tax Considerations for the Working Individual. Read of the series here:

  1. Tax Considerations for the Working Individual – Family and Filing Issues
  2. Tax Considerations for the Working Individual – Investment Income and Other Issues
  3. Tax Considerations for the Working Individual – Qualified Plan Issues


This information is not intended to be a substitute for specific individualized tax advice.  We suggest that you discuss your specific tax issues with a qualified tax advisor.

Tax Considerations for the Retiree – Qualified Plan Issues

Now that you’ve worked through your family and filing issues, as well as your investment income and other issues, it’s time to take a look at the last category for tax time consideration: qualified plan issues.

Qualified plans often play a large part in the retirees income equation, so it’s essential to properly account for distributions taken throughout the year. Additionally, each account type carries slightly different rules, so you want to stay on top of when you can begin distributions from one account or what your distribution requirements are for another.

This article is third in a series on Tax Considerations for the Retiree. Read of the series here:

  1. Tax Considerations for the Retiree – Family and Filing Issues
  2. Tax Considerations for the Retiree – Investment Income and Other Issues
  3. Tax Considerations for the Retiree – Qualified Plan Issues


Here are some questions to ask as you approach your qualified plan issues this season.

Are You Above Age 70 ½:

  • With an Inherited IRA?

    Ensure that your RMD has been met and reported (Form 1040, Lines 4a and 4b).
  • And Have Completed a Qualified Charitable Distribution?

    Double check that this amount if properly accounted for and that the amount is excluded on Form 1040, Line 4b.


Did you Fail to Take the Required Minimum Distribution?

Your Required Minimum Distribution is the minimum amount of money that you should withdraw from your retirement account(s). If you failed to take the RMD, you will need to pay a penalty, which can be calculated on Form 5329 and carried over to Schedule 4, Line 59.

Have You Made a Non-Deductible IRA Contribution?

Look at Form 8606 for more information about your non-deductible IRA contribution. Then, ensure that the cost basis for this contribution is properly tracked.

Have You Taken a Non-Qualified Distribution from a 529 Account?

If you took a non-qualified distribution from a 529 account, you’ll need to pay the penalty on the withdrawal amount. File form 5329 to account for the penalty and then carry it over to Schedule 4, Line 59. Your tax professional can provide personalized guidance if you want to understand more about whether your 529 distribution(s) is qualified.

Did You Withdraw from a Non-Deductible IRA?

You can use Form 8606 to ensure that the taxable and non-taxable portions of your distribution were calculated correctly.

Did You Convert Funds from a Traditional IRA to a Roth IRA?

Conversion of funds from a traditional IRA to Roth IRA can impact your bottom line at tax time. Use Form 8606 to report the converted amount and to ensure that non-deductible IRA contributions were converted and treated as non-taxable. If you made any conversions of this type, you’ll want to enlist your tax professional in assisting you to calculate this properly.

Have You Rolled Retirement Funds from One Account Type to Another?

Similarly, if you’ve converted retirement funds from one account type to another (ex. Moving funds from a 401(k) to an IRA), you want to ensure that this is reported and calculated properly. Ensure that funds are treated as a rollover and not as a distribution by double checking that Form 1040, Line 4a displays the rollover amount. Meanwhile, Form 1040, Line 4b should show $0.

Did You Rollover Retirement Funds and Utilize NUA?

If yes, you will need to review Form 1040, Lines 4a and 4b to see that your IRA distributions are recorded and to ensure that the basis was taxed.

These are only some of the considerations that you need to make as you review your 2018 tax return and prepare for the upcoming tax season. To learn more about tax considerations for the retiree, see our posts on family and filings issues, as well as what to do about investment income.

This article is third in a series on Tax Considerations for the Retiree. Read of the series here:

  1. Tax Considerations for the Retiree – Family and Filing Issues
  2. Tax Considerations for the Retiree – Investment Income and Other Issues
  3. Tax Considerations for the Retiree – Qualified Plan Issues


This information is not intended to be a substitute for specific individualized tax advice.  We suggest that you discuss your specific tax issues with a qualified tax advisor.