If you are unwilling or unable to sell your home, and need additional income during retirement, you may benefit from a reverse mortgage. Payments received on a reverse mortgage are not taxable to you. Tax-free income. A reverse mortgage can be used to generate tax-free income. You can convert the equity built up inside your home into cash without having to sell the home. Eliminate mortgage payments. A reverse mortgage can be used to pay off an existing mortgage, thereby reducing expenses.

Kinds of IRAs You can open different kinds of IRAs with a variety of organizations. You can open an IRA at a bank or other financial institution or with a mutual fund or life insurance company. You can also open an IRA through your stockbroker. Any IRA must meet Internal Revenue Code requirements, which are listed below for various arrangements. Traditional IRAs Your traditional IRA can be an individual retirement account or annuity.

Qualifications and Rules Certain qualifications must be met:  You must be at least age 701⁄2 when the distribution is made.  The maximum annual exclusion for QCDs is $100,000 per taxpayer. Any QCD in excess of the $100,000 exclusion limit is included in income as any other distribution. If you file a joint return, your spouse can also have a QCD and exclude up to $100,000.  The amount of the QCD is reduced by the aggregate IRA contribution deductions made by you after you turned 70 1⁄2.

View the entire article: Individual Retirement Accounts - Required Minimum Distributions RMDs 2021

Individual Retirement Accounts Beneficiaries of IRAs and Qualified Plans 2021

A traditional IRA is any IRA that is not a Roth IRA or a SIMPLE IRA. You can set up a traditional IRA if you receive taxable compensation during the year. You can have a traditional IRA even if covered by an employer-sponsored retirement plan. However, the deductible amount of contributions to a traditional IRA may be phased out. Contribution limit. For 2021, contributions to IRAs are limited to the lesser of your compensation (or spouse’s compensation under a spousal IRA), or $6,000 ($7,000 age 50 or older).

Generally, you can only contribute to a Roth IRA if you have taxable compensation and income less than the top of the phaseout range for your filing status (see chart below). If your income is greater than that threshold amount, you are prohibited from contributing directly to a Roth IRA. A “backdoor Roth IRA” allows a taxpayer to bypass income limitations by first making a nondeductible contribution to a traditional IRA and then converting it into a Roth IRA.

Individual Retirement Accounts - Traditional IRAs 2021  

Full Retirement Age If you were born in 1954 or earlier, you are eligible for full Social Security benefits in 2021. The following chart will guide you in determining your full retirement age. Delayed Retirement If you choose to delay receiving benefits beyond your full retirement age, your benefits will be increased by a certain percentage, depending on the year you were born. The increase will be added in automatically from the time you reach full retirement age until you start taking benefits or reach age 70, whichever comes first.

What is a Roth IRA? A Roth IRA is an individual retirement arrangement. It is a personal savings plan that gives you tax advantages for setting aside money for retirement. An account must be designated as a Roth IRA when opened. Roth IRA tax advantages and rules compared to a traditional IRA:  Contributions are not deductible. Being covered by an employer retirement plan is irrelevant.  If certain requirements are satisfied for qualified distributions, distributions are tax free.

Social Security retirement benefits are based on the following:  Lifetime earnings.  Age at time of retirement. Lifetime Earnings Higher lifetime earnings result in higher benefits. The highest 35 years are used to calculate average monthly earnings. Each year is indexed for inflation to approximate what earnings for that year would be in today’s dollars. Earnings for each year are also capped by the Social Security maximum earnings subject to Social Security tax for that year.