Key Pre-Retirement Mistakes to Avoid

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Greetings, Is there a list of how to prepare for retirement (as in getting ready to retire) or can anyone note the absolute pre-retirement mistakes to avoid as someone is preparing to retire? Thank you.

Ask the Experts - Retirement - July 2023

Jackstar221

Level 6

Hi,

Here is an article regarding tax tips for retirement:

https://turbotax.intuit.com/tax-tips/retirement/tax-tips-for-retirement/L4s2HEzIK

If you roll the money over to an Individual Retirement Account (IRA) you'll have more investment choices, but you must be at least age 59½ to avoid early withdrawal penalties from an IRA account.

Don't make the mistake of having a check made out to you. If you do, your employer will be required to withhold 20 percent of the balance for federal taxes. You have 60 days to get your money safely into an IRA, but you will have to come up with that 20 percent that was withheld by your employer. Any money that's not in an IRA within that time period will be treated as a distribution and subject to income taxes plus a 10 percent federal penalty if you are younger than age 59½. Many states assess their own taxes and penalties on top of the federal amounts.

You can avoid this potential problem by asking your retirement plan to send the money directly to your IRA or having them write the check to your IRA custodian.

In addition, here is an article from ssa.gov regarding taxable social security:

https://www.ssa.gov/benefits/retirement/planner/taxes.html

Feel free to reach out to our tax experts if you have questions: 1-800-446-8848.

Thank you,

John

CPA