Tax Planning in Retirement – Social Security, Roth Conversions, Dividends, and Annuities, Oh My!

Contributed by: Logan Dimitrie, CFP®

Why is Tax Planning Important?

Tax planning in retirement is important because you are no longer accumulating … you are now in the distribution phase … or “paying yourself.”

There are tax-efficient ways to do this. There are even some pitfalls to watch out for.

Introduction: A Different Lens on Retirement Income

At our firm, one of our core values is Commitment to Financial Planning. That means going beyond investment returns and focusing on after-tax outcomes.

In retirement, taxes don’t disappear; they become more complex.

The real opportunity lies in coordinating income sources, timing decisions, and understanding how different buckets are taxed.

Today, we’re going to explore:

• Why dividend-heavy strategies can backfire

• The power of capital gains brackets

• Roth conversion opportunities (and pitfalls)

• How Social Security taxation quietly increases your effective tax rate

• Why product decisions, like annuities, can limit flexibility

1. Not All “Income” Is Created Equal

One of the biggest misconceptions we see is the idea that dividends are inherently tax-efficient.

While qualified dividends can receive favorable tax treatment, they still:

• Add to your total taxable income

• Interact with other income sources (Social Security, IRA withdrawals, new OBBBA enhanced senior deduction thresholds)

• Can push you into higher tax brackets or increase Social Security taxation

Meanwhile, other strategies (like capital gain realization) can be more controllable and tax-efficient.

The Key Distinction:

• Ordinary income: IRA withdrawals, annuities, and non-qualified dividends could be taxed up to 37%

• Capital gains / qualified dividends: taxed at 0%, 15%, or 20% depending on income

Bottom line … tax treatment matters.

2. Capital Gains Brackets: A Huge Planning Opportunity

The tax code gives retirees a powerful planning window through preferential capital gains rates.

2026 Federal Capital Gains Thresholds (Taxable Income)

Married Filing Jointly:

• 0% rate: up to $98,900

• 15% rate: $98,900 to $613,700

Single filers:

• 0% rate: up to $49,450

• 15% rate: $49,450 to $545,500

These brackets sit on top of ordinary income.

Important nuance:

Your ordinary income fills the bracket first, and capital gains stack on top.

Planning opportunities:

• Tax-gain harvesting at 0%

• Coordinating withdrawals across pre-tax, after-tax, and Roth accounts

• Avoiding unnecessary dividend income that fills these brackets

3. Why Dividend Investing Can Actually Hurt You

Dividend investing is often marketed as “safe income,” but from a planning perspective, it can reduce flexibility.

The problem:

Dividends are:

• Forced income

• Taxable every year

• Not easily turned off in high-income years

Compare that to:

• Selling appreciated assets (you control timing)

• Using Roth funds (tax-free)

• Managing bracket exposure

Real planning issue:

Dividends can:

• Push you out of the 0% capital gains bracket

• Increase Social Security taxation

• Reduce your ability to execute Roth conversions efficiently

This is where our company value of Education and Personal Growth matters. We want clients to understand that “income” is not always optimal.

4. Roth Conversions: Filling the 12% Bracket Strategically

One of the most valuable retirement strategies is Roth conversion planning.

2026 Ordinary Income Anchors (MFJ):

• 12% bracket top: $100,800 taxable income

This creates a window to:

• Convert IRA assets at relatively low rates

• Reduce future RMDs

• Improve long-term tax diversification

Enhanced Senior Deduction Opportunity

OBBBA adds:

• $6,000 per person age 65+ (up to $12,000 MFJ)

• Begins phase-out at $150,000 MAGI (MFJ)

Planning opportunity:

• Convert income up to that phase-out threshold

• Capture deductions & low brackets simultaneously

5. The Hidden Trap: Effective Tax Rates & Social Security

This is where planning becomes critical.

Social Security taxation creates a “tax torpedo” effect:

• 0% taxable at low income

• Up to 50% taxable

• Up to 85% taxable once thresholds are exceeded

2026 Key Thresholds (MFJ):

• $32,000 … taxation begins

• $32,000–$44,000: up to 50% taxable

• Over $44,000: up to 85% taxable

These thresholds are based on the provisional income calculation for Social Security.

Why this matters:

Every additional $1 of income can:

• Trigger more SS becoming taxable

• Create an effective marginal rate far higher than 12%

Example: A “12% bracket” Roth conversion may actually feel like:

• 18%

• 22%

• Or higher after SS inclusion

It’s not about your marginal bracket. It’s about your effective rate on the next dollar.

This is where our other company value, Teamwork and Collaboration, matters. The analysis must be coordinated across:

• Tax projections

• Retirement income sources

• Timing of Social Security

For many retirees, the most attractive window for Roth conversions is the period after you retire but before you begin Social Security. During those years, income is often temporarily lower and easier to control. Once Social Security begins, the analysis becomes more complex, and it is important to evaluate whether conversions still make sense based on your effective tax rate.

6. Annuities & Their Flexibility Trade-Off

Annuities can serve a purpose, but they come with a planning cost.

The issue:

• Income is typically fully taxable as ordinary income

• Payments are often fixed and inflexible

• Little control over timing

Planning consequences:

• Fills up lower tax brackets

• Reduces room for Roth conversions

• Can increase Social Security taxation

• Amplifies the widow’s penalty

Widow’s penalty risk:

• Surviving spouse moves to single brackets

• Same income, but at higher rates

• Fixed annuity income leaves no adjustment flexibility

Flexibility is a tax asset.

7. Bringing It Back to CENTER

This is where our team’s values come to life:

• Commitment: We go beyond surface-level strategies

• Education: Helping clients understand tax mechanics

• Nice & Kind: Explaining complex topics simply

• Teamwork: Coordinating tax, investment, and retirement plans

• Energy: Proactively identifying opportunities

• Real: Honest conversations about trade-offs

Conclusion: Tax Planning Is the Strategy

Retirement is not just about generating income; it’s about controlling how that income shows up on your tax return.

The difference between a good plan and a great plan often comes down to:

• Timing

• Tax characterization

• Coordination across income sources

Every decision … income, investments, products … should be evaluated through a tax lens.

If you have any questions or would like to discuss how these strategies may affect your financial plan, please use this link to schedule a complimentary introductory call with me.

Logan Dimitrie, CFP® is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® Logan specializes in Financial Independence, Early Retirement, Financial Planning for caregivers and Longevity Planning. Logan has been featured on the Caffeinated Conversations podcast.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Center for Financial Planning, Inc is not a registered broker/dealer and is independent of Raymond James Financial Services Investment advisory services are offered through Center for Financial Planning, Inc. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Logan Dimitrie, CFP® and not necessarily those of Raymond James.

Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.

Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Additionally, each converted amount may be subject to its own five-year holding period. Converting a traditional IRA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion.

Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation.

Employee Stock Options: What Really Matters from Grant to Sale

Contributed by: Robert Ingram, CFP®

Non-qualified stock options (NQSOs) are a form of employer compensation that gives an employee the right to purchase a specific number of company shares at a predetermined price within a defined time period. Unlike direct stock grants Restricted Stock Units (RSUs), which provide actual shares of stock, NQSOs offer the option, but not the obligation, to buy shares in the future.

If you have access to these stock options, they can be one of the most valuable opportunities to build wealth through your employer—but they are also frequently misunderstood. On the surface, it might seem straightforward: you can buy your company’s stock at a set price and benefit from future growth. In practice, stock options involve a series of decisions that can have financial and tax consequences that unfold over time. From grant and vesting to exercise and eventual sale, each stage in the lifecycle of these NQSOs carries its own rules and implications for the value you ultimately realize.

Grant: It Starts with a Promise (Not Ownership)

When your company grants you stock options, you don’t actually receive stock. You receive something much more subtle: the right to buy stock later at a fixed price.

You’re told:

• How many options you have (number of shares you could buy)

• At what price you’ll be able to buy them (exercise price)

• When you’ll be allowed to use that right (the vesting schedule)

• And when the opportunity expires

As a hypothetical example, let’s say you were granted 4,000 options on May 1st, 2026, with an exercise price of $20 per share. The vesting schedule is that 25% of the total options vest after one year, and the remaining 75% of the options vest quarterly over the next three years. Finally, the expiration date is May 1st, 2036 (10 years from the grant date). Whoa! There’s a lot there. Let’s tackle it in stages.

At this stage, nothing has happened financially. No cash or value is exchanged. There are no actionable steps, and there is no taxation. There is just the potential opportunity that begins when your options vest.

Vesting: You Earn the Right to Act

Over time, those options that were granted “vest.” This means that the options become exercisable. The option becomes “yours,” and you can choose to exercise (or not exercise) the options (i.e., purchase shares with some or all of the vested options).

In most employee stock option plans, vesting is gradual, often spread out over a few years.

In our example above, the first 1,000 options vest one year from the grant date, so they would be exercisable on May 1st, 2027. From there, portions of the unvested shares vest each quarter for the next three years.

The following table illustrates how a vesting schedule might look, where each quarter an equal number of options vest from the end of year 1 until the end of year 4.

While this is a common type of vesting schedule, it is very important to understand your own employer’s specific vesting plan and to know when your options will be available to exercise. Until the options vest, they are not truly “yours,” and you may forfeit any future right to exercise them if you leave the employer, for example.

But here’s a key point about each vesting date: at vesting, still nothing happens financially. Vesting does not trigger taxes.

This is different from other types of equity compensation, such as Restricted Stock Units (RSUs). When RSUs vest and you receive shares, the total value of the shares at that time is considered income and would be reported and taxed as ordinary income.

When non-qualified stock options vest, there is still no action taken, and you haven’t received the value of any options, so there is no reported income or associated taxes. But now, your planning and decision-making start.

Exercising: When You Buy—and Taxes Kick In

Eventually, you reach the first decision point: do you exercise your options?

The value of stock options comes from the difference between what you’re allowed to pay for the stock and what it’s actually worth in the market.

So, from our example, let’s say you have options that have vested, and the value of the stock in the market is $45 per share. Because your options have an exercise price of $20 and you could purchase shares for $20, there is a gain of $25 per share ($45 - $20). The options allow you the opportunity to build that value without having to buy the shares outright (yet!).

Now, when you do exercise options (i.e., buy the shares) at any time up until the expiration date, this is where things change and taxes come into play.

At the time you exercise, the difference between the market value of the shares and the price you are able to pay to buy them is considered income and is reported to the IRS. In our example, if the value at the time of exercise is $45 per share and your purchase price is $20, you would have ordinary income of $25 per share.

If you exercised 1,000 shares, that would be 1,000 × $25 → $25,000 in taxable income.

Many people assume taxes happen when they sell the shares. While sales can and often do occur around the same time as the exercise, the exercise itself often triggers the biggest tax impact.

If you choose to exercise options in a high-income year, the extra income may push you into higher tax brackets. Another scenario is waiting to exercise large groups of options all at once. This could also dramatically change your overall income in that year and therefore impact your tax liability. This is why careful tax planning is an important part of managing your stock options.

Quick Note on Taxes at Exercise (and How They’re Paid)

Taxes here aren’t just reported and owed—they’re typically withheld. Employers are generally required to withhold taxes at the time of exercise. This usually includes federal taxes, state income tax, Social Security, and Medicare (FICA taxes). How is the withholding paid?

Methods for covering taxes:

• Cash payment (out of pocket) – sending payment from your bank or wire transfer to cover the taxes

• Selling shares to cover – the plan sells a portion of exercised shares to cover the taxes

  • This is the most common approach used

• Withholding shares – the plan withholds a number of shares equal in value to the taxes instead of selling shares on the market

  • This is less common for public company stock option plans

Selling Shares: Turning the Value into Cash

To fully realize the usable value of the options and shares, you would sell the shares for cash as the final financial outcome and decision.

Taxes may come into play again after you exercise and sell your shares (as capital gains or losses).

Remember, at exercise, the difference between the market value and the exercise price is already taxed as income, so the cost basis of the exercised shares becomes the market value at the time of exercise.

Cost basis in our example: if exercising shares when market value was $45 → cost basis = $45

If you were to sell those shares for $55, for example → you would have a $10 capital gain.

If, on the other hand, you sold the shares at $35 → you would have a $10 capital loss.

Depending on when you choose to sell your exercised shares, you could have a short-term capital gain or loss (if held for less than one year) or a long-term capital gain or loss (if held for more than one year). With the tax treatment differences between short-term and long-term capital gains, this again adds further tax planning considerations to your decisions.

Note: You are typically responsible for any taxes associated with these capital gains or losses, as they are not withheld by the employer plan.

From Exercise to Ownership to Selling: (How You Get There)

When you exercise your options, you’re no longer holding an option—you now own stock. There is generally no maximum holding period before having to sell, and there is no risk of losing rights to the shares if you leave the employer, retire, etc.

But there are a few methods for exercising options and turning them into real value.

• Pay in cash (hold all shares) – covering the cost of the share purchases and usually the tax withholding by writing a check or transferring funds to the plan administrator. You retain all of the shares until you decide to sell some or all of them.

At this point, you might be asking, “What if I don’t have the cash, or I don’t want to use my funds to exercise the options?”

Cashless Exercise:

• Sell some shares at exercise (hold some shares) – a portion of shares is sold immediately to cover the cost of the shares exercised (and usually the tax withholding). You retain the remaining shares.

You would then hold the remaining shares for investment until you decide to sell them.

The other type of cashless exercise is one of the most common methods for using options and converting them into usable value:

• Cashless exercise (sell everything) – you exercise options, and all the shares are sold immediately, covering the cost of shares and taxes, leaving you with cash proceeds instead of stock.

This full cashless exercise allows you to turn the value of your options into cash in one step with no out-of-pocket cost and avoids the ongoing risk of holding the stock. That can be very advantageous for many people.

However, there may be cases where exercising options to hold shares makes sense. One advantage is that potential future growth may be taxed at capital gains rates, which could be lower than ordinary income rates. Depending on your current income and expected future income, this difference may significantly impact your overall outcome.

Bottom Line

Stock options are more than just a one-time benefit. They involve a process and decisions based on many factors over several years (even a decade or longer). Small differences in timing, taxes, and personal choices at each step add up to shape your results.

As with many complex financial decisions that have tax and other implications, you should consult with your financial planner and tax advisor.

If you’ve received stock options and aren’t completely confident in how they fit into your overall plan, we’re happy to have a conversation.

Please don’t hesitate to contact us!

Robert Ingram, CFP®, is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® With more than 15 years of industry experience, he is a trusted source for local media outlets and frequent contributor to The Center’s “Money Centered” blog.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Center for Financial Planning, Inc. Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Any opinions are those of Bob Ingram, CFP® and are not necessarily those of RJFS or Raymond James. Raymond James Financial Services, Inc. and its advisors do not provide advice on tax issues, these matters should be discussed with the appropriate professional.

What to Understand About “Trump Accounts”

Contributed by: Michael Brocavich, CFP®, MBA

With the passage of “The One Big Beautiful Bill” in 2025, one of the more talked-about provisions is the introduction of Trump Accounts— a new type of savings and investment account designed specifically for children.

As we continue reviewing the details and thinking through how these may fit into our clients’ overall financial plans, we wanted to provide an overview of what you need to know. Like our previous updates, this highlights the provisions we believe are most relevant and will continue to evolve as additional IRS guidance is released.

What is a Trump Account?

A Trump Account is a tax-advantaged investment account for children under age 18. Think of it as a hybrid between a traditional IRA and a custodial account designed to give kids a long-term financial head start. The account is owned by the child, with a parent or guardian acting as custodian until age 18.

The Headline Feature: $1,000 Government Contribution

Children born between January 1, 2025, and December 31, 2028, are eligible for a one-time $1,000 contribution from the U.S. Treasury. Families must elect into the program to receive this benefit. This seed money is designed to give every eligible child a starting point for long-term investing.

Contribution Rules

Families and others can contribute up to $5,000 per year. Employers may contribute up to $2,500 annually, and these contributions are not taxable to the employee. Contributions are made with after-tax dollars.

How the Money is Invested

Funds must be invested in low-cost, diversified U.S. stock index funds or ETFs. Fees are capped, and the structure is designed to prioritize long-term growth and simplicity.

Accessing the Funds

Funds are generally not accessible before age 18. After that point, the account transitions to a structure similar to a traditional IRA, reinforcing the long-term nature of the strategy.

Tax Treatment

Contributions are made with after-tax dollars and grow tax-deferred. Withdrawals are generally taxable, which places these accounts somewhere between traditional retirement accounts and taxable brokerage accounts.

Who Should Consider a Trump Account?

These accounts may make sense for families looking to start investing early for children or take advantage of the initial government contribution. However, they are not a replacement for other tools such as 529 plans, custodial accounts, or Roth IRAs.

Key Planning Considerations

As we evaluate how these fit into broader plans, we are watching how they interact with financial aid rules, future tax treatment, coordination with existing strategies, and overall funding priorities.

Final Thoughts

Trump Accounts introduce a new way to build wealth for the next generation. The concept is simple: start early, invest consistently, and allow compounding to do the heavy lifting. As always, the right strategy will depend on your individual situation and overall financial goals. Please talk with our Financial Planners to see if a Trump account is the right savings vehicle for your family.

Michael Brocavich, CFP®, MBA is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® He has an extensive background in both personal and corporate finance.

Every investor's situation is unique, and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

You should discuss any tax or legal matters with the appropriate professional. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Michael Brocavich, CFP® and not necessarily those of Raymond James.

What are The Hidden Costs of Buying a Home?

Contributed by: Robert Ingram, CFP®

When buying a home within your budget, it’s important to consider the costs beyond the mortgage.

Let’s begin with the costs to purchase a home.

Even while carrying a mortgage, you will need to make a down payment. While there are low down payment loans, try to put down at least 20% of the purchase price. Otherwise, your loan may have a higher interest rate and you could face additional monthly costs such as mortgage insurance.

You will have closing costs, which can include things such as loan origination fees for processing and underwriting the mortgage, appraisal costs, inspection fee, title insurance, pre-paid property taxes, and first year’s homeowner’s insurance. Generally, you should expect to pay between 3-5% of the mortgage amount.

Now, you will have ongoing costs to live in your home.

Annual property taxes average about 1% of the home value nationwide, but the tax rates can vary widely depending on the city or town. Keep property taxes top of mind when you are looking at different communities.

Homeowner’s insurance is another annual cost that not only depends on the value of the home and the contents within it you are covering, but also on the state and local community. This cost generally ranges between $2,000-3,000 per year, sometimes more.

If your home is a condominium or a single family home, you should expect annual or monthly homeowner’s association fees that cover the care of common areas, the grounds, clubhouses, or pools. Depending on the number of amenities and of course the location, average fees range from $200-400 per month.

While you may be used to paying some utilities as a renter, the size of your new home could significantly increase your utility rates. Going from an 800 square-foot apartment to a 2,500 square-foot house could double or triple the costs to heat it, cool it, and to keep

the lights on. Add your local area water and sewer fees and your utilities could easily reach $600–700 per month or more.

Going from renting to homeownership also means having to maintain the new home (both inside and out). Things can be regular ongoing maintenance like lawn care and landscaping, or larger projects like painting, roof repair, furnace, and appliance replacement. Consider the tools and equipment you would need to buy or the services you would hire to do the work.

Finally, there is another hidden cost that can put a dent in your budget, filling up the house. A home with more rooms can mean more spaces that “need” furniture and other decorative touches. The costs of furnishings can be several thousands of dollars to tens of thousands of dollars. Without proper planning, it can be all too easy to rack up those credit card statements and have a mountain of debt as you move into your new home.

Robert Ingram, CFP®, is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® With more than 15 years of industry experience, he is a trusted source for local media outlets and frequent contributor to The Center’s “Money Centered” blog.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Bob Ingram, and not necessarily those of Raymond James. Raymond James Financial Services, Inc. does not provide advice on mortgages. Raymond James and its financial advisors do not solicit or offer residential mortgage products and are unable to accept any residential mortgage loan applications or to offer or negotiate terms of any such loan. You will be referred to a qualified professional for your residential mortgage lending needs.

Changes in tax laws or regulations may occur at any time and could substantially impact your situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors we are not qualified to render advice on tax or legal matters. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.

The Mega Backdoor Roth Explained: A Powerful Tax Free Retirement Strategy for High Earners

Contributed by: Logan Dimitrie, CFP®

Is the Mega Backdoor Roth Worth Considering?

At Center for Financial Planning, Inc., I’m often asked how high earners can save more for retirement in a tax‑efficient way. One strategy that sometimes makes sense is the Mega Backdoor Roth. It kind of sounds like a cheat code from a 90s video game, but it’s actually a powerful tool if your employer plan allows it.

What It Is

A Mega Backdoor Roth lets you put far more into Roth savings than the normal IRA limit by using after‑tax contributions inside your 401(k) or 403(b).

How It Works

1. Max out your regular 401(k)/403(b)
   ($24,500 if under 50 & $32,500 if 50+ for tax year 2026 limits)

2. Add after‑tax contributions
   Some plans let you contribute beyond the normal limit, up to the overall $72,000 total plan limit for 2026.

3. Convert those after‑tax dollars to a Roth IRA
   Your plan needs to allow in‑service rollovers for this step.

Once converted, those dollars can grow tax‑free in a Roth IRA.

Why People Use It

• You can save much more into Roth than usual.

• Tax‑free growth and tax‑free withdrawals in retirement.

• No required minimum distributions from Roth IRAs.

Before You Jump In

This strategy isn’t available, or appropriate, for everyone. You’ll want to confirm:

• Your employer plan allows after‑tax contributions and in‑service rollovers

• You’re already maxing out regular retirement contributions

• You’re comfortable with a bit of extra complexity

Is It Right for You?

For some clients, the Mega Backdoor Roth becomes a key part of long‑term tax planning. For others, simpler strategies work just as well. If you’re curious about whether this could fit into your plan, I’m happy to walk through it with you.

Logan Dimitrie, CFP® is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® Logan specializes in Financial Independence, Early Retirement, Financial Planning for caregivers and Longevity Planning. Logan has been featured on the Caffeinated Conversations podcast.

Opinions expressed are those of the author and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Generally, if you take a distribution from a 401k prior to age 59 ½, you may be subject to ordinary income tax and a 10% penalty on the amount that you withdraw, in addition to any relevant state income tax. Contributions to a Donor Advised Fund are irrevocable. Changes in tax laws or regulations may occur at any time and could substantially impact your situation. Raymond James financial advisors do not render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional. Investing involves risk and investors may incur a profit or a loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

Retirement Planning Challenges for Women: How to Face Them and Take Action

Contributed by: Sandra Adams, CFP®

If we are being completely honest, planning and saving for retirement seems to be more and more challenging these days – for everyone. No longer are the days of guaranteed pensions, so it’s on us to save for our own retirement. Even though we try our best to save…life happens and we accumulate more expenses along the way. Our kids grow up (and maybe not out!). Our older adult parents may need our help (both time and money). Depending on our age, grandchildren might creep into the picture.  Add it all up and the question is: how are we are supposed to retire? We need enough to potentially last 30 to 35 years (depending on our life expectancy). Ugh! 

While these issues certainly impact both men and women, the impact on women can be tenfold. Let’s take a look at some of the major issues women face when it comes to retirement planning. 

1. Women Have Fewer Years of Earned Income Than Men 

Women tend to be the caregivers for children and other family members. This ultimately means that women have longer employment gaps as they take time off work to care for their family. The result: less earned income, retirement savings, and Social Security earnings. It can also halt career trajectory.   

Action Steps 

• Attempt to save at a higher rate during the years you ARE working. It allows you to keep pace with your male counterparts.

• If you are married you may want to save in a ROTH IRA or IRA (with spousal contributions) each year, even if you are not in the workforce. 

• If you are serving as the caregiver for a family member, consider having a Paid Caregiver Contract drawn up to receive legitimate and reportable payment for your services. This could potentially help you and help your family member work towards receiving government benefits in the future, if and when needed. 

2. Women Earn Less Than Men 

For every $1 a man makes, a woman in a similar position earns 84¢ according to the Bureau of Labor Statistics. As a result, women see less in retirement savings and Social Security benefits based on earning less.  

Action Steps 

• Again, save more during the years you are working. Attempt to maximize contributions to employer plans. Also, make annual contributions to ROTH IRA/IRAs and after-tax investment accounts. 

• Invest in an appropriate allocation for your long term investment portfolio, keeping in mind your potential life expectancy. 

• Be an advocate for yourself and your women cohorts when it comes to requesting equal pay for equal work. 

3. Women Are Less Aggressive Investors Than Men 

In general, women tend to be more conservative investors than men. Analyses of 401(k) and IRA accounts of men and women of every age range show distinctly more conservative allocations for women. Especially for women, who may have longer life expectancies, it’s imperative to incorporate appropriate asset allocations with the ability for assets to outpace inflation and grow over the long term. 

Action Steps 

• Work with an advisor to determine the most appropriate long term asset allocation for your overall portfolio, keeping in mind your potential longevity, potential retirement income needs, and risk tolerance. 

• Become knowledgeable and educated on investment and financial planning topics so that you can be in control of your future financial decisions, with the help of a good financial advisor. 

4. Women Tend to Live Longer Than Men 

Women have fewer years to save and more years to save for. The average life expectancy is 82.1 for women and 77.8 for men according to the Centers for Disease Control and Prevention. Since women live longer, they must factor in the health care costs that come along with those years.   

Action Steps 

• Plan to save as much as possible. 

• Invest appropriately for a long life expectancy. 

• Work with an advisor to make smart financial decisions related to potential income sources (coordinate spousal benefits, Social Security, pensions, etc.) 

• Make sure you have a strong and updated estate plan. 

• Take care of your health to lessen the cost of future healthcare. 

• Plan early for Long Term Care (look into Long Term Care insurance, if it makes sense for you and if health allows). 

5. Women Who Are Divorced Often Face Specific Challenges and Are Less Likely to Marry After “Gray Divorce” (Divorce After 50) 

From a financial perspective, divorce tends to negatively impact women far more than it does men. The average woman’s standard of living drops 27% after divorce while the man’s increases 10% according to the American Sociological Review. That’s due to various reasons such as earnings inequalities, care of children, uneven division of assets, etc. 

The rate of divorce for the 50+ population has nearly doubled since the 1990s according to the Pew Research Center. The study also indicates that a large percentage of women who experienced a gray divorce do not remarry; these women remain in a lower income lifestyle and less likely to have support from a partner as they age. 

Action Steps 

• Work with a sound advisor during the divorce process, one who specializes in the financial side of divorce such as a Certified Divorce Financial Analyst (CDFA) (Note: attorneys often do not understand the financial implications of the divorce settlement). 

6. Women Are More Likely to Be Subject to Elder Abuse 

Women live longer and are often unmarried or alone. They may not be as sophisticated with financial issues. They may be lonely and vulnerable. New reports highlight financial exploitation as the fastest-growing form of elder abuse, disproportionately affecting older women, according to the Transamerica Institute.  

Action Items 

• If you are an older adult, put safeguards in place to protect yourself from Financial Fraud and abuse. For example: check your credit report annually and utilize credit monitoring services like EverSafe.  

• Have your estate planning documents updated, particularly your Durable Powers of Attorney documents, so that those that you trust are in charge of your affairs if you become unable to handle them yourself. 

• If you are in a position of assisting an older adult friend or relative, check in on them often. Watch for changes in their situations or behavior and do background checks on anyone providing services. 

While it is unlikely that the retirement challenges facing women will disappear anytime soon, taking action can certainly help to minimize the impact they can have on women’s overall retirement planning goals. I have no doubt that with a little extra planning, and a little help from a quality financial advisor/professional partner, women will be able to successfully meet their retirement goals.   

If you or someone you know are in need of professional guidance, please give us a call. We are always happy to help. 

Sandra Adams, CFP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® and holds a CeFT™ designation. She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Raymond James is not affiliated with EverSafe.

The cost and availability of Long Term Care insurance depend on factors such as age, health, and the type and amount of insurance purchased. These policies have exclusions and/or limitations. As with most financial decisions, there are expenses associated with the purchase of Long Term Care insurance. Guarantees are based on the claims paying ability of the insurance company.

Can I Afford to Buy a Second Home?

Contributed by: Robert Ingram, CFP®

It’s a dream for many Americans as they envision retirement, having a second home as a vacation getaway, a seasonal escape, or a primary residence someday. Even with the relatively mild winter we’ve just experienced in Michigan It’s easy to appreciate the idea of living away during the cold months or enjoying a summer home up North. But before you can live the dream, do your due diligence and crunch the numbers.

Retirement income expenses include the daily cost of living and the things you want to enjoy. Making a large purchase, such as buying a second home, will take a significant chunk of your savings. If you’ve underestimated the cost, it will wreak havoc on your retirement income.

So, how realistic is your second home retirement plan? Factor in our suggestions below.

Purchasing Costs

If you plan to buy the home using a mortgage, you will of course have a monthly payment. While lower mortgage rates may help with the home’s affordability, even a smaller payment adds the extra expense that your retirement income sources will need to support. Calculate your withdrawal rate (the percentage of savings needed to be withdrawn each year) and determine if it’s sustainable over your retirement years.

Now, if you’re able to purchase the property without a mortgage, yes, you would avoid paying interest and you would have no monthly payment. On the other hand, using a portion of your retirement savings to purchase the home could mean that you have fewer assets reserved for other retirement spending needs. Consider the impact it may have on the sustainability of your retirement income and whether purchasing or financing the property is more advantageous.

Don’t forget about property taxes. They’re ongoing expenses that you must factor into your budget. They vary widely depending on the state and local community. Consider any difference in tax rates; non-homestead property is taxed higher than homestead property.

Additional Costs

Unfortunately, we know that the cost of owning a home doesn’t end with the purchase. This is certainly true with a second home as well. Depending on the property type, location, and climate/environment there may be additional costs that you aren’t used to with your current home. It’s vital that your plan supports these costs as well. Some examples include:

Insurance: You’ll pay annual premiums for homeowner’s insurance on two properties. Plus, homes with higher risk (e.g. hurricane prone southern states) often require additional flood or wind damage insurance. In some cases, this more than doubles the cost of the new policy.

Condo/Association Fees: Buying a condominium or a standalone house in a community with a neighborhood association will likely mean additional monthly fees. Homeowners associations may also impose special assessments during the time you own the property for maintenance projects, community amenities, etc. Understanding the previous history of assessments and the need for future projects can help you better prepare for those potential costs.

Maintenance on two properties: Now you have two homes to maintain. If your second property is far away or you won’t visit often, you may need to hire people locally to provide the maintenance services for you.

Home security: Especially for a home that is unoccupied for long periods of time, you want to protect it from vandalism, trespassing, and burglary. That could mean investing in security systems or working with local service providers to routinely check-in on the property.

Heating and cooling year-round: Unlike cottages or houses up North that you can close down and winterize, vacation homes in warm climates may require you to run the air conditioning when you’re not there. Issues like mold and mildew can be a problem when temperatures and humidity are too high, which is another reason you may need to hire local services to make sure everything is working properly.

Insect/pest control: Your second home may be in a region with insects or other critters that require more regular/aggressive pest control. Add this to your list of monthly or annual maintenance expenses.

What if I Plan to Rent Out my Second Home?

Renting out your second home could be an excellent way to generate additional income to offset the costs of ownership. However, you could face lifestyle compromises. Here are some considerations:

Local rules on renting: It’s critical to understand any local government ordinances or homeowners’ association restrictions on using your property as a rental. In some cases, short-term rentals are not allowed or there are limits on the total number of rentals.

Property management: The farther the distance between your rental and primary properties, the greater chance you’ll need to hire a property manager to provide on-site service for your vacation guests or long-term tenants. Property managers can advertise, book renters, and manage financial transactions. The cost to outsource these services is typically between 20–30% of the rental cost, depending on market.

Additional insurance coverage: Tenants may not be covered by your insurance. Homeowners insurance often covers incidents only when the property is owner-occupied. You may need to add a form of landlord insurance, depending on factors such as the frequency and amount of days you will have the property rented. Review your policy to be sure.

Extra maintenance and repair: You may face repairs and/or need to replace furniture. Studies suggest that the cost to maintain a vacation rental is 2–3% annually of the property value each year.

The decision to buy a second home involves a combination of both lifestyle and financial considerations. Build a sound plan by balancing your priorities. Consult with your financial planner as you work through these important life goals, and if we can be a resource for you, please reach out to us!

Robert Ingram, CFP®, is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® With more than 15 years of industry experience, he is a trusted source for local media outlets and frequent contributor to The Center’s “Money Centered” blog.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Bob Ingram, and not necessarily those of Raymond James. Raymond James Financial Services, Inc. does not provide advice on mortgages. Raymond James and its financial advisors do not solicit or offer residential mortgage products and are unable to accept any residential mortgage loan applications or to offer or negotiate terms of any such loan. You will be referred to a qualified professional for your residential mortgage lending needs.

The Surprising Tax Trap for Surviving Spouses - Understanding the Widow’s Penalty

Contributed by: Nick Defenthaler, CFP®, RICP®

Several years ago, after starting a new relationship with a newly widowed client, I received a confused phone call from her. She had received a communication from Medicare stating that her Part B & D premiums would increase significantly from the prior year. To make matters worse, she also noticed, while filing her most recent tax return, that she was now in a much higher tax bracket. What happened? Now that her husband was deceased, she was receiving less in Social Security and pension income. Her total income had decreased, so why would she have to pay more tax and Medicare premiums? Unfortunately, she was a victim of what’s known as the “widow’s penalty.”

Less Income and More Taxes – What Gives?

Simply put, the widow’s penalty is when a surviving spouse ends up paying more taxes on less income after the death of their spouse. This happens when a widow or widower starts filing as a single filer the year after their spouse’s death.

When the first spouse dies, the surviving spouse typically sees a reduction in income. While the surviving spouse will continue to receive the greater of the two Social Security benefits, they will no longer receive the lower benefit. In addition, it’s also very likely the surviving spouse will either completely or partially lose income tied only to the deceased spouse (ex. employment income, annuity payments, or pensions with reduced or no survivor benefits).  Depending on how much income was tied to the deceased spouse, the surviving spouse’s fixed income could see a sizeable decrease. However, the surviving spouse starts receiving less income and is subject to higher taxes.

With some unique exceptions, the surviving spouse is required to start filing taxes as single instead of as married filing jointly in the year following their spouse’s death. In 2026, that means they will hit the 22% bracket at only $50,401 of taxable income. Married filers do not reach the 22% bracket until they have more than $105,700 of taxable income. To make matters worse, the standard deduction the widow will receive will be almost cut in half. In 2026, for a married couple (both over 65), their standard deduction will be $35,500. A single filer (over the age of 65), however, will only have a $18,150 deduction! Unfortunately, even with less income hitting the tax return, widowed tax filers commonly end up paying higher taxes due to the compression of tax brackets and the dramatic standard deduction decrease for single filers.

Another recent layer of complexity that can perpetuate the issue of the ‘widow’s penalty’ is the new ‘additional senior deduction’ that went into effect in 2025 and expires at the end of the tax year 2028. If a married couple is over the age of 65 and has an Adjusted Gross Income (AGI) of $150,000 or less, they will receive an additional $12,000 deduction that can offset income. For single filers, the deduction amount is only $6,000 and starts to phase out once AGI exceeds $75k. If one spouse passes away, not only will this deduction be reduced, but it’s possible the surviving spouse sees a dramatic decrease or complete elimination of the $6k deduction they’d receive because of the dramatically different income thresholds that apply to this new deduction.

Tax brackets are not the only area in which surviving spouses are penalized. Like the client in my story above, many surviving spouses see their Medicare premiums increase even though their income has decreased because of how the income-related monthly adjusted amount is calculated (click HERE to visit our dedicated Medicare resource page). Specifically, single filers with a modified adjusted gross income (MAGI) of more than $109,000 are required to pay a surcharge on their Medicare premiums, whereas there is no surcharge until a couple that is married filing jointly reaches $218,000 of income. This means that a couple could have an income of $130,000 and not be subject to the Medicare IRMAA surcharge, but if the surviving spouse now has income over $109,000, their premium will increase by almost $1,200 per year. In this same example, the widow could now be in the 24% bracket (as compared to the 12% bracket with $130k of income filing jointly) and be paying almost $12,000 MORE between increased Medicare premiums (IRMAA charges), federal and state of Michigan tax!

Proactive Planning

Short of remarrying, there is no way to avoid the widow’s penalty. However, if your spouse has recently passed away, there may be some steps you can take to help minimize your total tax liability.

For most widows, the year their spouse dies will be the last year they will be allowed to use the higher married filing jointly tax brackets and standard deduction. In some cases, it can make sense to strategically realize income during the year of death to minimize the surviving spouse’s lifetime tax bill. A surviving spouse might do this by converting savings from a Traditional IRA to a Roth IRA while they are still subject to the married filing jointly rates.

For example, let’s say I was working with a couple (we’ll call them John and Mary), and after several years in a long-term care assisted living facility, John sadly passed away at age 85. Because John and Mary did not have long-term care insurance, they incurred substantial out-of-pocket medical expenses, resulting in a significant medical deduction in the year of John’s passing. Several months after her husband’s passing, Mary suggests we convert over $100,000 from her IRA to a Roth IRA. Because this was the last year she could file jointly on her taxes along with the significant medical deduction that was only present the year John passed, Mary paid an average tax rate of 10% on the $100,000 converted. Mary is now filing single and finds herself in the 24% tax bracket, so converting the funds at a much lower rate may be beneficial depending on each individual’s situation.

I believe the widow’s penalty should be on every married couple’s radar. While it’s possible that while both spouses are living, their tax rate will always remain the same, as we’ve highlighted above, unless both spouses pass away within a very short period of time from one another, higher taxes and Medicare premiums are likely inevitable. However, proper planning could help to dramatically reduce the impact this penalty could have on your plan.

Nick Defenthaler, CFP®, RICP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® Nick specializes in tax-efficient retirement income and distribution planning for clients and serves as a trusted source for local and national media publications, including WXYZ, PBS, CNBC, MSN Money, Financial Planning Magazine and OnWallStreet.com.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Center for Financial Planning, Inc is not a registered broker/dealer and is independent of Raymond James Financial Services Investment advisory services are offered through Center for Financial Planning, Inc. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Nick Defenthaler, CFP®, RICP® and not necessarily those of Raymond James.

Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.

These examples are hypothetical illustrations and are not intended to reflect any actual outcome. they are for illustrative purposes only. Individual cases will vary. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Prior to making any investment decision, you should consult with your financial advisor about your individual situation.

Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Additionally, each converted amount may be subject to its own five-year holding period. Converting a traditional IRA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion.

Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation.

Important Information for Tax Season 2025

Contributed by: Andrew O’Laughlin, CFP®, MBA

As we prepare for tax season, we want to keep you informed about when you can expect to receive your tax documentation from Raymond James.

2025 Form 1099 Mailing Schedule

• January 31 – Mailing of Form 1099-Q and Retirement Tax Packages.

• February 15 – Mailing of original Form 1099s.

• February 28 – Begin mailing delayed and amended Form 1099s.

• March 15 – Final mailing of any remaining delayed original Form 1099s.

Additional Important Information

Important Update for Qualified Charitable Distribution (QCD) 1099-Rs

If you are over 70.5 and have sent distributions from your IRA to charitable organizations, this will likely apply to you!

Qualified Charitable Distributions will be reported on a second 1099-R if you also have normal distributions. If you sent any QCDs in the 2025 calendar year, you can expect to receive a 1099-R with a new distribution code, Code Y, to identify Qualified Charitable Distributions (QCDs).

• The first Form 1099‑R will report your normal IRA distributions without Code Y (distributions that are not considered QCDs)

• The second Form 1099‑R will report Code Y, to designate the taxpayer’s QCDs.

The second 1099-R is not a duplicate of the first 1099-R. It is important that you provide both documents to your tax preparer.

Clients can view their forms in Client Access under My Accounts → Documents → Tax Reporting. Those enrolled in electronic delivery will receive an email when documents become available.

Please note that Raymond James does not validate whether a distribution qualifies as a QCD or whether receiving institutions are IRS‑recognized charitable organizations. Taxpayers are responsible for confirming QCD eligibility and ensuring proper reporting on their tax returns.

If you have any questions, please do not hesitate to reach out to us. We would be happy to assist!

Delayed Form 1099s

In an effort to capture delayed data on original Form 1099s, the IRS allows custodians (including Raymond James) to extend the mailing date until March 15, 2026, for clients who hold particular investments or who have had specific taxable events occur. Examples of delayed information include:

• Income reallocation related to mutual funds, real estate investment, unit investment, grantor and royalty trusts, as well as holding company depositary receipts.

• Processing of original issue discount and mortgage-backed bonds.

• Expected cost basis adjustments including, but not limited to, accounts holding certain types of fixed income securities and options.

If you do have a delayed Form 1099, we may be able to generate a preliminary statement for you for informational purposes only, as the form is subject to change.

Amended Form 1099s

Even after delaying your Form 1099, please be aware that adjustments to your Form 1099 are still possible. Raymond James is required by the IRS to produce an amended Form 1099 if notice of such an adjustment is received after the original Form 1099 has been produced. There is no cutoff or deadline for amended Form 1099 statements. The following are some examples of reasons for amended Form 1099s:

• Income reallocation.

• Adjustments to cost basis (due to the Economic Stabilization Act of 2008).

• Changes made by mutual fund companies related to foreign withholding.

• Tax-exempt payments subject to alternative minimum tax.

• Any portion of distributions derived from U.S. Treasury obligations.

What Can You Do?

You should consider talking to your tax professional about whether it makes sense to file an extension with the IRS to give you additional time to file your tax return, particularly if you held any of the aforementioned securities during 2025.

If you receive an amended Form 1099 after you have already filed your tax return, you should consult with your tax professional about the requirements to re-file based on your individual tax circumstances.

And Don’t Forget…

As you complete your taxes for this year, a copy of your tax return is one of the most powerful financial planning information tools we have. Whenever possible, we request that you send a copy of your return to your financial planner, associate financial planner, or client service associate upon filing. Thank you for your assistance in providing this information, which enhances our services to you.

We hope you find this additional information helpful. Please call us if you have any questions or concerns about the upcoming tax season.

Andrew O’Laughlin, CFP®, MBA; is the Director of Client Services at Center for Financial Planning, Inc.® He has the CERTIFIED FINANCIAL PLANNER™ certification.

Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. Raymond James financial advisors do not render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional.

2026 Retirement Account Contribution and Eligibility Limits

Contributed by: Robert Ingram, CFP®

The IRS has rolled out the updated contribution limits for retirement plans and IRA accounts for 2026. There are some notable changes this year, including some higher ‘catch-up’ contributions for those looking to boost their savings. Here’s a quick look at some new contribution limits and adjustments to income eligibility limits for some contributions, as you plan for the year ahead.

Employer Retirement Plan Contribution Limits (401k, 403b, most 457 plans, and Thrift Saving)

• $24,500 annual employee elective deferral contribution limit (increases $1,000 from $23,500 in 2025)

• $8,000 extra “catch-up” contribution if age 50 and above (increases from $7,500 in 2025)

• Total amount that can be contributed to the defined contribution plan, including all contribution types (e.g., employee deferrals, employer matching, and profit sharing), will be $72,000 or $78,000 if age 50 and above (increased from $70,000 or $77,500 for age 50+ in 2025)

*Special additional “catch-up” contribution for ages 60, 61, 62, and 63

Under a change made in SECURE ACT 2.0 a couple of years ago, starting this year in 2025, there is a higher catch-up contribution limit for employees who are age 60, 61, 62, or 63 who participate in the above plans.

• Additional catch-up is $3,750 for 2025 in addition to the age 50 and over catch-up outlined above.  Total catch-up contribution is $11,250 for those aged 60, 61, 62, and 63.

• In 2026, this special additional catch-up contribution for those aged 60, 61, 62, or 63 remains the same as in 2025 (total catch-up of $11,250).

Traditional, Roth, SIMPLE IRA Contribution Limits:

Traditional and Roth IRA

• $7,500 annual contribution limit (increases from $7,000 in 2025)

• $1,100 “catch-up” contribution if age 50 and above (increases from $1,000 in 2025)

Note: The annual limit applies to any combination of Traditional IRA and Roth IRA contributions. (i.e. You would not be able to contribute up the maximum to a Traditional IRA and to up the maximum to a Roth IRA.)

SIMPLE IRA

• $17,000 annual elective contribution limit (increases $500 from $16,500 in 2025)

• $4,000 “catch-up” contribution if age 50 and above  (increases from $3,500 in 2025)

*SECURE Act 2.0 also sets a higher “catch-up” contribution limit to a SIMPLE for those aged 60-63 )

• Total catch-up contribution of $5,250  for ages 60, 61, 62, or 63 remains the same for 2026 as in 2025.

Traditional IRA Deductibility (income limits):

You may qualify to deduct contributions to a Traditional IRA from your taxable income. Your eligibility depends on factors such as your tax filing status, whether you or your spouse is covered by an employer-sponsored retirement plan, and your Modified Adjusted Gross Income (MAGI).  The amount of a Traditional IRA contribution that is deductible reduces (“phased out”) as your MAGI approaches the upper limits of the phase-out range.  For example,

• Filing Single

  • You are covered under an employer plan

    • Partial deduction phase-out begins at $81,000 up to $91,000 (then above this, no deduction) compared to 2025 (phase-out: $79,000 to $89,000)

• Married filing jointly

  • Spouse contributing to the IRA is covered under an employer plan

    • Phase-out begins at $129,000 to $149,000 compared to 2025 (phase-out: $126,000 to $146,000)

  • Spouse contributing is not covered by a plan, but the other spouse is covered under a plan

    • Phase-out begins at $242,000 to $252,000 compared to 2025 (phase-out:  $236,000 to $246,000)

Roth IRA Contribution (income limits):

Similar to making tax-deductible contributions to a Traditional IRA, being eligible to contribute to a Roth IRA depends on your tax filing status and your income.  Your allowable contribution reduces ("phased out") as your MAGI approaches the upper limits of the phase-out range.  For 2026, the limits are as follows:

• Filing Single or Head of Household

  • Partial contribution phase-out begins at $153,000 to $168,000  compared to 2025 (phase-out:  $150,000 to $165,000)

•   Married filing jointly

  • Phase-out begins at $242,000 to $252,000 compared to 2025 (phase-out: $236,000 to $246,000)

If your MAGI is below the phase-out floor, you can contribute up to the maximum.  Above the phase-out ceiling, you are ineligible for any partial contribution.

Remember, contributing to accounts such as a Traditional IRA or a Roth IRA also requires earned income.  If you’re not eligible to contribute to a Roth IRA due to income limits or lack of earned income, strategies such as a Roth IRA conversion could be a smart alternative for some situations.  Since conversions can have  different tax implications, you should consult with your financial planner and tax advisor before implementing these strategies.

As always, if you have any questions surrounding these changes, don’t hesitate to contact us!

Have a wonderful holiday season and a great start to the New Year!

Robert Ingram, CFP®, is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® With more than 15 years of industry experience, he is a trusted source for local media outlets and frequent contributor to The Center’s “Money Centered” blog.

Any opinions are those of Bob Ingram, CFP® and not necessarily those of Raymond James. Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc.

The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.