Tax Break for Seniors: Another Benefit for Seniors in a Tough Economy
By: George Fisher
For seniors who have been fortunate to have money in retirement accounts and maintain significant value in those accounts, Uncle Sam has just provided significant relief.
Both the House and Senate unanimously and in record-time passed the Worker, Retiree, and Employer Recovery Act of 2008, clearing the way for the President's signature. This new tax law temporarily suspends the requirement for taxpayers age 70-1/2 and older (and their beneficiaries) to make annual minimum distributions from their retirement plan accounts. This will provide older Americans some much-needed financial flexibility as they struggle to manage their finances during this difficult economic time.
Tax laws generally require individuals with retirement accounts to make required withdrawals based on the size of their account and their age every year after age 70-1/2. The new law suspends the required minimum distribution from retirement accounts in 2009. This waiver, available to everyone regardless of their total retirement account balances, applies to all defined-contribution plans, including 401(k), 403(b), 457(b), and IRA accounts. Suspending the mandatory withdrawal allows retirees to keep the money in their account if they choose, and possibly recover some losses. The suspension for 2009 also applies to beneficiaries of retirement plan accounts and IRA owners.
Retirement accounts are only one facet of a senior's financial landscape. There's social security, pensions, annuities and other possible income sources. No matter what your blend of income happens to be, you also have a blend of expenses. Of course there's housing, transportation, food, clothing and the big one for many seniors is medical. Today's economy has many seniors in the minus column when they subtract their expenses from their income.
Recent reports indicate that a large number of seniors eligible for retirement are continuing to work to make ends meet or looking for employment.With unemployment at its highest rate in over 25 years, that may not be the most viable option. Seniors who are homeowners with a good deal of equity in their home can create additional tax-free income, lump sum withdrawals or lines of credit and never have to pay the money back as long as they live in their home. They can do this with a reverse mortgage. The funds can be used for any purpose and most reverse mortgages are insured by the federal government. Reverse mortgages can be processed for seniors with no out of pocket costs. That means no upfront appraisal or application fees. There are no income or credit qualifications and reverse mortgages are available for seniors who are 62 or older.
With these different financial options available, thanks to Uncle Sam seniors may to able to weather the storm of this economy in grand style. According to market research, only 1% of seniors who are eligible for a reverse mortgage have one. However, it is much more popular than 5 years ago. Reverse mortgages are not for everyone, but to many it's a life changer, a true positive difference maker. It costs nothing but a little time to find out if it right for you.
About The Author: George Fisher is a Senior Mortgage Advisor with over 17 years of mortgage industry experience. His website at http://www.getmyreverse.com offers reverse mortgages info for Ohio residents. Subscribe for a FREE monthly newsletter for seniors at firstname.lastname@example.org or at http://www.getmyreverse.com. For more information via a FREE 24/7 pre-recorded message Call 800-558-8757 x675.