Retirement plans have tons of rules and regulations that you must adhere to. If you don’t, you may be losing out on a ton of savings. Don’t get caught up by something that you can easily avoid. Here are just a few examples of mistakes that can trip you up.
Don’t put all your savings into tax-deferred plans. Take advantage of a Roth IRA to have tax-free withdrawals. Granted, you may be in a lower tax bracket when you retire, but taxes are always on the rise so you might end up paying more in taxes down the road.
Don’t forget to update your beneficiaries. Things change from the time you set up your retirement plan until you actually retire. These include marriage, a birth of a child and the passing of a loved one. Make sure the person you want to inherit your plan really does.
Don’t assume a nonworking spouse can’t contribute. He or she may not have earned income, but as long as his or her spouse does, he or she may contribute to an IRA.
Don’t take the wrong required minimum distribution. Once you reach age 70 1/2, the IRS requires you to take minimum distributions. If you fail to take the right amount, you face a 50% penalty.