Are You Paying for Tax Prep That Should Be Free? Ep # 128

Last year 14 million Americans paid for tax prep that they could have had for free. Are you one of those people? Today, we’ll take a look at why people are spending money they don’t need to and how to rectify that. I’ll also answer some insightful listener questions concerning legal documents for retirees, the rule of 55, and whether we have reached the end of the bull market. So grab your headphones and pay attention so that you can level up your knowledge to make the best of your retirement.

Today, we’ll take a look at why people are spending money they don’t need to and how to rectify that. Click To Tweet

Outline of This Episode

[1:22] Are you paying for tax preparation services when you shouldn’t have?
[4:00] Can a person roll their old 401K’s into their current employer plan?
[6:18] What legal paperwork is important to have on hand in retirement?
[12:58] Is the bull market over?

Why are millions of Americans paying for tax prep that could be free?

If you earn under $69,000 you don’t need to be paying for tax preparation services. The IRS created the free file program in 2003 which is eligible to the 104 million Americans who make less than $69,000. Unfortunately, the service is so confusing that only 2.5 million people actually use it. Instead, taxpayers use professional help or tax software to help them file their taxes. If you make less than $69,000 and use those tax preparation services make sure that the service is fully transparent. Consider using the free file program to save money on tax preparation.

Are you one of those people that paid for tax prep services that didn't have to? Click To Tweet

Can a person roll their old IRAs and 401K’s into their current employer plan?

Mark has a question about the rule of 55. He thinks that if he rolls traditional IRAs and old 401K’s into his current employer’s plan would give him more money to access. Yes, you can move outside IRA’s into your employer-sponsored plan before you retire as long as your current employer allows it. Doing so would make those funds available for the age of 55 rule. The 55 rule allows you to move funds directly from your employer-sponsored plan before age 59 ½. Find out why you don’t need to roll all of your funds into that program by listening to this episode of Retirement Starts Today.

What legal paperwork is important to have on hand in retirement?

I’m not an attorney nor do I play one on tv so take my suggestions with a grain of salt. I think it is important to have the big 3: a power of attorney, a will, and a healthcare directive.

I find in my financial planning practice that it is important for married couples to have a power of attorney on hand. Creating a power of attorney can prevent any future problems especially if one spouse becomes incapacitated for some reason.

It may be a headache and a bit of an upfront expense to get this legal paperwork in order, but it will save you and your beneficiaries plenty of money and grief in the future.

I think it is important to have the big 3: a power of attorney, a will, and a healthcare directive. Click To Tweet

Is the bull market over?

Despite most of the financial industry saying that we are still in a bull market, I think it may be over. There are a lot of nuances to deciding whether we are still in a bull market or entering a bear market, but it is really all about the headlines. The important thing to remember in any market is to devise a plan that can work through any scenario. Don’t let the headlines sway you from your strategy. Create a swiss army knife portfolio that can see you through your retirement.