PODCAST: Defusing the Retirement “Tax Bomb” with David McClellan – Kiplinger’s Personal Finance

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David Muhlbaum: You’ve been told by plenty of people, us included, that saving for retirement is important. You’ve probably also heard that step one is putting aside salary in a 401(k) plan, if one is available to you, or some other retirement vehicle. But there’s a catch. Saving for your retirement is a good thing, but in short, if you keep deferring the taxes, they’ll likely bite you in the end. We’ll talk to an expert in defusing what’s sometimes called the retirement tax bomb. Also, more checks from the government? Well, maybe. All coming up in this episode of Your Money’s Worth. Stick around.

David Muhlbaum: Welcome to Your Money’s Worth. I’m Kiplinger.com senior editor David Muhlbaum, joined by my co-host, senior editor Sandy Block. How are you doing, Sandy?

Sandy Block: Oh, I’m doing great.

David Muhlbaum: Good for you. Well, you know as well as I do that one of the most popular things we’ve ever written about were the pandemic-era stimulus checks, because, you know, money from the government, whee!

Sandy Block: You got a check, I got a check, almost everybody got a check.

David Muhlbaum: Yeah. Good times. Good times, until the bill comes due for old Uncle Sam. But we’re just going to slide right by that political hot potato. Anyway, you gave me a heads-up that some of us are going to get more checks from the government, and that is related in a way to the pandemic, but it’s more limited, even if it’s related. So that’s my hype. What’s the reality, Sandy?

Sandy Block: Well, filing your taxes is never fun, but it was particularly stressful during the pandemic. You were more likely to win the Powerball than get someone from the IRS on the phone, and I can speak to that personally. And on top of that, various changes in the tax code complicated the process, which is why people tried to get someone from the IRS on the phone. So the IRS gave taxpayers more time to file and pay in 2020 and 2021. But even with those extensions, some taxpayers and businesses failed to meet the deadlines and they were charged a penalty.

So here’s where the checks come in. Some of those taxpayers will get that penalty money back. The IRS is sending out more than $1.2 billion in tax refunds …….

Source: https://www.kiplinger.com/retirement/605210/podcast-is-there-a-tax-bomb-in-your-retirement-portfolio

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