The week's best financial advice

Three top pieces of financial advice — from tax tips for inherited 401(k)s to downsizing for retirement

Facebook.
(Image credit: iStock)

Here are three of the week's top pieces of financial advice, gathered from around the web:

Facebook's lending plans

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE
https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Tax tips for inherited 401(k)s

Inheriting a retirement account from anyone but a spouse used to come with a substantial all-at-once tax hit, said Bill Bischoff at MarketWatch. Current rules now allow beneficiaries a way to defer taxes by rolling over the distribution into an IRA. "But you must follow the proper procedure to get this taxpayer-friendly outcome." That means setting up an IRA specifically to receive an inherited retirement plan's distribution. This must be accomplished by a direct trustee-to-trustee transfer of the funds; a check can't be made out to you personally. Doing this, "you can effectively accomplish a tax-free rollover." Once the money is in the receiving IRA, you also must start taking the required minimum withdrawals each year.

Downsizing for retirement

"A smaller home can cut your costs and your cares," said Cybele Weisser at Money. Among retirees who move, nearly half opt for a smaller place. They should do their due diligence first. Moving costs, including broker fees, can add up to 10 percent of the price of an old home. Depending on where they move, tax bills may shrink, but home insurance premiums could grow. Condos are generally cheaper than single-family homes, but come with maintenance fees and homeowners association rules. Renting is also an option, especially if retirees want to add the proceeds of a home sale to their retirement portfolio. It's also a good idea to move sooner rather than later. It's easier to downsize in your 60s than in your 80s.