Here are three of the week's top pieces of financial advice, gathered from around the web:
Winning at frequent-flier miles
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Tips for special needs children
"Increasing life spans make retirement planning more of a challenge for everyone — but especially for parents of disabled children," said Elizabeth O'Brien at The Wall Street Journal. Individuals with Down syndrome, for example, now have a life expectancy of 60 years, compared with 25 in 1983. Government benefits offer some help, but there's a catch. To be eligible for Supplemental Security Income and Medicaid, disabled individuals generally must not have more than $2,000 in assets. Experts advise parents to establish a special needs trust early on; the assets of such trusts don't affect the beneficiary's eligibility for government assistance. Another tool is the newly created 529 ABLE account, which works like a 529 college-savings plan. Parents can contribute $14,000 annually, with the money used to pay for qualified expenses like housing, employment training, and assistive technology.
Avoid the retirement tax trap
"At age 70½, the bill comes due on all those tax-deferred savings accounts we've been building," said Suzanne Woolley at Bloomberg. The biggest worry is that required minimum distributions from IRAs and 401(k)s — determined by an IRS formula based on life-expectancy — will push a retiree into a higher income bracket. "To minimize the tax bite," a favorite strategy of financial planners is to strategically convert money from a traditional IRA into a Roth IRA. That happens after individuals turn 59½ and are able to tap tax-deferred accounts without penalty, but before they're required to do so. The point is to pay taxes on that money when retirees are in a lower tax bracket, before they begin drawing Social Security benefits or a pension.
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