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1.
You must generally begin making mandatory withdrawals from 401(k) and traditional IRA accounts when you reach what age?
73. You must generally begin making mandatory withdrawals from 401(k) and traditional IRA accounts when you reach 73.
2.
What does "stepped-up basis" mean?
An investment's basis changes to that of the market value on the day of your death. Stepped-up basis is most commonly known in estate planning, where if you die, the basis will step up to that of the day of your death. Whoever inherits the stock will thus enjoy less tax on it.
3.
If you have a capital loss of $4,000 in one year and you deduct the limit of $3,000 on your income tax return, what happens to the leftover $1,000?
You carry it over to the next year. The IRS lets you carry over any undeducted loss into subsequent years.
4.
Which type of tax-advantaged account offers the potential for tax-exempt distributions?
A Roth IRA. A Roth IRA offers tax-free distributions, as long as certain rules are met. The downside is that Roth IRAs must be funded with after-tax dollars.
5.
If you should have both large capital gains and large capital losses, what would be the most effective way to reduce taxes on the gains?
Realize both the gain and the loss in the same year. If you did this, the losses would offset the gains. If you did either of the other two approaches, you would either be stuck with a tax bill or you might have to stretch out your losses over many years.
