Americans largely unaware of RMD rules for IRAs.
MORE AMERICANS HAVE AN ACCURATE understanding of how lottery winnings are taxed than they do of the main components of retirement income, new research reveals.
The "Retirement Tax Considerations for Middle-Income Americans" study, by the Center for a Secure Retirement, polled 1,000 Americans ages 50 and older with an annual household income of between $25,000 and $75,000 on questions relating to federal taxes.
When asked to choose which activity they disliked the most, respondents said that doing taxes (23 percent) is almost equally as disliked as the unpleasant experience of going through airport security (29 percent). In fact, getting a flu shot is preferable to doing taxes for many middle-income Americans over age 50.
However, when it comes to completing and filing their annual tax returns, 38 percent work with a tax preparer, 54 percent prepare and file their own tax return, and 31 percent use tax-preparation computer software. Nearly one in five (18 percent) complete their tax returns on their own without any external advice or guidance.
The report adds that a large percentage of older Americans are unaware that significant tax penalties apply when rules governing 401 (k) retirement accounts are not followed. More than half (57 percent) do not know that 70V2 is the age at which required minimum distributions from traditional IRAs and 401 (k) plans must begin.
A majority of the respondents are unaware that in certain circumstances they may be able to withdraw funds from a traditional IRA without penalty.
The research for this report was conducted in February 2014 for the Bankers Life Center for a Secure Retirement by the independent research firm The Blackstone Group.
Most middle-income Americans age 50 and older cannot identify many of the tax deductions potentially associated with retirement. Additionally:
56% do not know that blindness is cause for a higher standard deduction;
68% cannot correctly identify 65 as the age at which a higher standard deduction is granted; and
90% are unaware that, in some cases, they may claim their parents living outside the household as their dependents for tax purposes.
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|Title Annotation:||THE BEAT // DAILY NEWS|
|Author:||Hersch, Warren S.|
|Publication:||National Underwriter Life & Health|
|Date:||May 1, 2014|
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