Month: July 2025

Preface: “The chief business of the American people is business. They are profoundly concerned with producing, buying, selling, investing, and prospering in the world.” – Calvin Coolidge, January 25, 1925

Big Tax Changes Ahead: What You Should Know About the One Big Beautiful Bill (OBBB) and Bonus Depreciation

On July 4, 2025, President Trump signed a major new tax law called the One Big Beautiful Bill Act (OBBB). This law updates the U.S. tax code in big ways. It retains some tax breaks from past laws, ends or modifies others—especially green energy incentives—and introduces new benefits for both individuals and businesses.

One of the biggest changes affects bonus depreciation, a rule that allows businesses to immediately deduct the full cost of certain types of property and equipment. Let’s break down what bonus depreciation is, what’s changed under the OBBB, and how it may benefit you or your business.

What Is Bonus Depreciation?

Bonus depreciation allows a business to write off the full cost of certain assets in the year they are placed into use, rather than spreading the deduction over several years.

You can use bonus depreciation for:

• • Equipment and machinery (like trucks, tools, and factory machines)
  • Computers and software
  • Certain plants and trees
  • Water utility property

Both new and used property may qualify, as long as it was bought and put into service after September 27, 2017.

Under the older Tax Cuts and Jobs Act (TCJA), the bonus depreciation was:

• • 100% from 2017–2022
  • Then dropping by 20% each year until it reached 0% in 2027

What Did the OBBB Change?

The OBBB reverses the phase-out and makes 100% bonus depreciation permanent—but only for property bought after January 19, 2025.

That means if you buy and start using qualified property after that date, you can deduct the full cost right away, saving money on taxes upfront.

Here’s a quick summary of changes:

Property Type	Old Rate (2025)	New OBBB Rate
Regular Property	40%	100%
Long Production Property (like aircraft)	60%	100%

Transition Option for 2025

If you buy property in your first tax year after January 19, 2025, you can choose to use the older lower rate (like 40% or 60%) instead of the new 100% rate. This might be helpful if you want to spread out deductions or if you’ve already planned your taxes using the older rates.

Special Expensing for Sound Recordings 

The OBBB also adds a new tax break for music and audio production.

If you record music or sound in the U.S., you can now deduct up to $150,000 of those costs immediately.

But there’s a catch: this benefit expires after December 31, 2025. Also, if you claim the deduction but don’t start production before that date, the IRS may take the deduction back.

Tip: To be safe, make sure your sound recording starts before the end of 2025.

What About Qualified Production Property?

The OBBB creates another bonus depreciation option for something called qualified production property—basically, certain types of commercial real estate used for manufacturing.

Here’s how it works:

• • The building must be constructed after January 19, 2025, and before January 1, 2029
  • It must be placed in service by December 31, 2030
  • You must use the building yourself (you can’t rent it out and still claim this benefit)
  • The property must be used for manufacturing, refining, or producing physical products

Offices, software development, sales buildings, and parking garages do not qualify. But a new facility used to build furniture, machine parts, or packaged food would qualify.

If a natural disaster (an “Act of God”) delays your building, you may be allowed a little more time to place it in service.

Planning Tips

Here’s what all this means in simpler terms:

1. 1. Buy smart after January 19, 2025: If you’re thinking about buying new machinery, tools, or equipment, doing it after this date could mean a 100% tax deduction up front.
   2. Think beyond equipment: If you’re in the music industry, you could deduct up to $150,000 in sound recording costs—but you must act before 2026.
   3. Build for manufacturing: If you’re planning to build a new factory or production facility, this is a golden opportunity. You can write off the entire cost much faster, boosting cash flow.
   4. Watch the deadlines: The rules are strict about when property must be built and placed in service. Missing a date can cost you thousands in tax savings.

Final Thoughts

The One Big Beautiful Bill Act is full of significant changes, and bonus depreciation is one of the most effective tools businesses can use to lower their taxes.

Whether you run a construction company, own a factory, or produce music in a studio, this law could help you save money, but only if you plan ahead.

As always, consult a tax professional before making significant financial decisions. The new rules can be complex, and a CPA can help you determine what qualifies and how to report it accurately.

Want to explore whether your equipment, sound recordings, or new building project qualifies? Contact our office today to schedule a tax planning consultation.

Preface: “Personality is how you respond on a typical day, character is how you show up on a hard day.” ― Adam M. Grant, Hidden Potential: The Science of Achieving Greater Things

Book Report: Hidden Potential by Adam Grant

In Hidden Potential: The Science of Achieving Greater Things, organizational psychologist and bestselling author Adam Grant tackles a vital question: What does it take to unlock our fullest potential? In typical Grant fashion, the book is rich with psychological research, real-world examples, and storytelling that challenges long-standing assumptions about talent, intelligence, and success.

At the heart of Grant’s argument is the belief that greatness isn’t born—it’s grown. And one of the most overlooked yet essential ingredients in this growth is character.

Skills of Character: The Core Idea

Grant defines character not as a fixed trait or moral superiority, but as “your capacity to prioritize your values over your instincts.” It’s what enables a person to do the hard thing when the easy thing feels more natural. The good news, according to Grant, is that character is not innate—it’s malleable and can be intentionally developed.

Rather than placing success solely on intelligence or natural talent, Hidden Potential makes a compelling case that it’s the internal skills of character—like the ability to seek discomfort, persevere through awkwardness, and take initiative in unfamiliar territory—that truly set high achievers apart.

Embracing Discomfort

One of the standout messages of the book is that discomfort is essential for growth. Grant states, “The best way to accelerate growth is to embrace, seek, and amplify discomfort.”

He references situations where people voluntarily put themselves in uncomfortable environments—be it athletes training at higher altitudes or students grappling with unfamiliar topics—not because it’s pleasant, but because it stretches their capacity. This aligns with the psychological concept of “desirable difficulty”, where learning is deeper and more lasting when it feels hard.

This theme comes through most vividly when Grant quotes the fictional coach Ted Lasso: “If you’re comfortable, you’re doing it wrong.” In other words, comfort may be the enemy of growth.

The Myth of Learning Styles

Another crucial insight Grant explores is the myth of learning styles. Though widely accepted in popular culture and education, the idea that people learn best in their preferred mode (visual, auditory, kinesthetic, etc.) doesn’t hold up under scientific scrutiny.

According to Grant, people may have learning preferences, but those preferences do not correlate with better outcomes. Often, they are simply a reflection of what feels most comfortable. Grant argues that learning effectively often requires doing what is uncomfortable, which circles back to his core message.

He encourages readers to challenge their assumptions about how they best absorb knowledge and to experiment with unfamiliar modes of learning. For example, a person who thinks they are a visual learner may actually retain more by teaching others or engaging in active discussion.

Procrastination: A Matter of Emotion, Not Laziness

In a clear take on procrastination, Grant challenges the common misconception that it stems from laziness or poor time management. Instead, he frames procrastination as an emotional avoidance strategy—a way to sidestep the discomfort tied to a task.

This builds on psychologist Tim Pychyl’s research that suggests we don’t procrastinate to avoid work—we do it to avoid negative emotions like anxiety, self-doubt, or boredom. The implication: if we want to stop procrastinating, we need to stop avoiding discomfort and start embracing it.

Again, this aligns with Grant’s broader argument: the ability to tolerate and even seek out discomfort is a cornerstone of character development and long-term achievement.

From Theory to Practice

Grant’s ideas are more than theoretical. Throughout the book, he backs up his points with practical strategies, stories of real people who overcame odds by building character-based skills, and guidance on how readers can do the same.

For example, he recommends:

• • Deliberate discomfort: Put yourself in situations that stretch your limits.
  • Reflective journaling: Document moments when you acted against your values—and how to improve next time.
  • Accountability partnerships: Surround yourself with people who remind you of your values when instincts push you elsewhere.

Conclusion

Hidden Potential is a powerful reminder that who we become is less about who we are now and more about how we choose to grow. Through his discussion of character as a set of learnable skills, Grant offers an optimistic and evidence-based path to self-improvement.

In a world obsessed with talent and quick wins, Grant shifts the focus to the slow, often uncomfortable work of building the inner skills that sustain true success. For students, professionals, and lifelong learners alike, this book offers a clear and deeply motivating lens through which to understand growth, challenge, and the pursuit of excellence.

The Big Beautiful Bill Act (BBB): What Taxpayers Should Know

Welcome to our latest tax blog post, where we delve into the “One Big Beautiful Bill Act” (OBBBA), signed into law on July 4, 2025. This legislation introduces significant changes to the U.S. tax code, particularly affecting individual taxpayers and businesses. Building upon the 2017 Tax Cuts and Jobs Act (TCJA), the OBBBA makes several tax provisions permanent and introduces new tax benefits. Now let’s explore the key tax provisions and their implications.

Key Tax Provisions for Individual Taxpayers:

Permanent Extension of 2017 Tax Cuts: The OBBBA solidifies the individual tax rates established under the TCJA, which were previously set to expire at the end of 2025. This includes maintaining lower marginal tax rates and increasing standard deduction amounts, providing long-term tax planning certainty for individuals.

Increased Standard Deduction: For tax years beginning after 2024, the standard deduction amounts are increased to:

• • $15,750 for single filers
  • $23,625 for heads of household
  • $31,500 for married individuals filing jointly.

These amounts will be adjusted for inflation in subsequent years, simplifying tax filing for many and potentially reducing taxable income.

Social Security Taxation: While the OBBBA does not eliminate federal income taxes on Social Security benefits, it introduces a new tax deduction specifically for seniors

A deduction amount of $6,000 for individuals aged 65 and older; $12,000 for married couples filing jointly.  Available to individuals with a modified adjusted gross income (MAGI) up to $75,000, and married couples with MAGI up to $150,000, the deduction phases out for individuals with MAGI between $75,000 and $175,000, and for married couples between $150,000 and $250,000 and applies to tax years 2025 through 2028.

This deduction is designed to reduce or eliminate the tax liability on Social Security benefits for approximately 88% of recipients, particularly benefiting middle-income seniors.

Many low-income seniors already do not pay federal income taxes on their Social Security benefits. Therefore, the new deduction is likely to have a minimal impact on this group. Seniors with incomes above the phase-out thresholds will not benefit from the new deduction and will continue to pay taxes on their Social Security benefits as they do now.

The senior tax deduction is set to expire after the 2028 tax year. Unless Congress enacts further legislation to extend or make this provision permanent, the tax treatment of Social Security benefits will revert to the previous law starting in 2029.

Tax planning considerations: First, senior taxpayers should assess their income levels to determine eligibility for the new deduction and plan accordingly to maximize tax benefits during the effective years. Secondly, given the temporary nature of the deduction, staying informed about potential legislative extensions or modifications is crucial for long-term financial planning. Finally, engaging with tax advisors can help seniors navigate the complexities of the new provisions and optimize their tax situations.

Enhanced Child Tax Credit: Beginning in tax year 2025, the child tax credit increases to $2,200 (non-refundable) per qualifying child, with the refundable portion set at $1,700. (This is reduced from the House-passed credit of $2500.) These amounts will be adjusted for inflation, beginning in 2026. The income phaseout thresholds are set at $200,000 for single filers and $400,000 for joint filers.

Temporary Increase in SALT Deduction Cap: The state and local tax (SALT) deduction cap is temporarily increased to $40,000 for taxpayers with modified adjusted gross income (MAGI) under $500,000, effective through 2029. The cap will revert to $10,000 starting in 2030.

Deductions for Tips and Overtime Pay: A temporary deduction introduced for qualified tips and overtime compensation received by individuals earning less than $150,000 annually:

• • Tips: up to $25,000 (unchanged)
  • Overtime: up to $12,500 (single) / $25,000 (MFJ)

This provision is set to expire in 2028 and aims to provide tax relief to workers in industries where tips and overtime are significant components of their income.

Auto Loan Interest Deduction: Buyers of U.S.-assembled vehicles can deduct up to $10,000 per year in auto loan interest for purchases made between 2025 and 2028. The deduction phases out for individuals earning over $100,000 or couples earning over $200,000, encouraging domestic vehicle purchases.

Introduction of “Trump Accounts” for Children: The OBBBA establishes “Trump Accounts,” allowing parents to create tax-deferred accounts for their children. Each account receives a one-time $1,000 credit per child, with annual contribution limits set at $5,000 per child. These accounts are designed to promote long-term savings for children’s future expenses.

Above-the-Line Charitable Deductions: Beginning in 2026, non-itemizing taxpayers can claim an above-the-line deduction for charitable contributions. The deduction amounts are:

1. • Up to $1,000 for single filers
   • Up to $2,000 for married couples filing jointly

This provision aims to encourage charitable giving among taxpayers who do not itemize their deductions.

The OBBBA also introduces a temporary, nonrefundable tax credit for donations to organizations that primarily grant scholarships to private or religious elementary and secondary schools. The credit is for 100% of the gift, up to the lesser of $5,000 or 10% of the taxpayer’s adjusted gross income (AGI). This provision is effective until 2029.

The above-the-line deduction provides a direct tax benefit to non-itemizers, potentially encouraging more taxpayers to make charitable contributions. This tax credit for scholarship contributions is designed to bolster funding for private and religious schools, aligning with certain educational policy objectives. While these provisions offer new opportunities for tax savings, they also add complexity to tax planning. Taxpayers should carefully document their contributions and consult with tax professionals to maximize benefits and ensure compliance.

Charitable deductions of Itemizers must meet a floor of 0.5% of AGI to qualify.

Residential Solar Tax Credit Changes:

Accelerated Phase-Out of the 30% Residential Clean Energy Credit: The OBBBA accelerates the expiration of the 30% Residential Clean Energy Credit for solar installations. Previously extended through 2034 under the IRA, this credit will now expire on December 31, 2025. Homeowners must install and place their solar systems in service by this date to qualify.

Elimination of Tax Credits for Leased Solar Systems: The legislation removes eligibility for tax credits on leased residential solar systems, beginning in 2028. This change affects homeowners who opt for leasing arrangements, a common financing method that previously allowed access to tax benefits without upfront costs. Leased and PPA solar systems remain eligible for the credit if installed and in service by December 31, 2027.

Impact on Battery Storage Incentives: Tax credits for residential battery storage systems, which were previously eligible under the IRA, are also set to expire at the end of 2025. This affects homeowners looking to enhance energy resilience through storage solutions. Commercial/grid-scale battery storage remains eligible if in service by December 31, 2027.

Commercial Solar and Clean Energy Incentives:

Revised Timelines for Investment and Production Tax Credits: Commercial solar projects must now begin construction within 60 days of the bill’s enactment and be placed in service by December 31, 2028, to qualify for the Investment Tax Credit (ITC) and Production Tax Credit (PTC). This accelerates the timeline compared to previous provisions.

Restrictions on Foreign Entities of Concern (FEOCs): The OBBBA introduces limitations on projects involving materials or components sourced from entities identified as FEOCs, particularly those from China. Projects utilizing such components may be disqualified from receiving tax credits, which could impact supply chains and project planning.

Changes to Transferability of Tax Credits: The bill restricts, but does not repeal, the ability to transfer certain clean energy tax credits. The timelines are now shorter and there are FEOC-related exclusions.

Implications and Considerations:

• • • For Homeowners:
      • To benefit from existing tax credits, homeowners should aim to complete solar installations by the end of 2025.
      • Those considering leasing options should be aware that the associated tax benefits are being eliminated after 2027.

• • • For Businesses:
      • Commercial entities planning solar projects need to adhere to the new construction and service timelines to qualify for tax incentives.
      • Supply chain assessments are crucial to ensure compliance with FEOC-related restrictions.

Key Tax Provisions for Business Taxpayers:

Qualified Business Income (QBI) Deduction Made Permanent:  The BBB tax bill makes permanent the 20% §199A deduction for eligible pass-through businesses such as sole proprietorships, partnerships, S corporations, and some trusts and estates. It also expands the SSTB phase-out band to $75,000 (single)/ $150,000 (joint), indexed.

1. • Example: If you operate an LLC generating $200,000 in qualified business income, your deduction of $40,000 is now available permanently.

Bonus Depreciation Reinstated to 100%: The BBB bill reinstates 100% bonus depreciation for qualified property acquired and placed in service between January 20, 2025, and January 1, 2030. This allows businesses to immediately expense the entire cost of new (and eligible used) equipment, technology, and machinery in the year they’re placed in service.

1. • Example: If your business purchases $500,000 in machinery in 2025, you can write off the full amount that year, rather than depreciating it over 5 to 7 years.

Immediate Expensing of Research & Experimental (R&E) Costs: The BBB bill repeals the requirement to amortize R&E expenses over 5 years—a rule that began in 2022 under prior law—and allows immediate expensing of such costs for a temporary period.

1. • Benefits for Innovative Businesses: Boosts cash flow for businesses heavily engaged in R&D, encourages innovation by reducing the after-tax cost of experimentation and development, and is a critical win for startups, software firms, biotech companies, and engineering-driven industries.

Paid Family and Medical Leave Credit Made Permanent: The Section 45S tax credit, originally temporary, is now permanent under the BBB bill. This provision allows employers to receive a credit of up to 25% of wages paid during periods of qualified family and medical leave.

1. • Why This Matters: Encourages businesses to offer or continue offering paid leave programs, helps employers compete in tight labor markets with family-friendly policies, and reduces the effective cost of paid leave benefits.

Expanded Employer-Provided Child Care Credit: The BBB bill significantly expands the tax credit for employer-sponsored childcare.

1. • Credit rate increased from 25% to 40%.
   • Maximum credit raised from $150,000 to $500,000 for general businesses, and up to $600,000 for eligible small businesses.
   • Indexed for inflation in future years.
   • Benefits: Supports working parents, especially in dual-income households, positions companies as family-focused employers, and offers significant relief in industries hit hardest by the childcare shortage.

Final Thoughts: Strategy and Compliance: The BBB Tax Bill presents business taxpayers with significant opportunities, but these opportunities also come with corresponding responsibilities.

Key Action Steps:

• • Tax Planning: Review your depreciation strategies and capital expenditure plans to align with the return of 100% bonus depreciation.
  • Entity Review: Reassess whether your business structure is optimized to benefit from the enhanced QBI deduction.
  • R&D Audit: Document all eligible research expenses carefully to ensure full expensing and IRS compliance.
  • HR Policies: Update leave and childcare policies to ensure they qualify for new and enhanced credits.
  • Long-Term Investment: Evaluate manufacturing and infrastructure projects to benefit from the new 35% credit.

As always, consult your tax advisor to help tailor a proactive strategy that aligns your business goals with the latest federal tax benefits.

Bottom Line: The BBB Tax Bill is a powerful package of incentives for American businesses. Whether you’re a startup innovator, an established manufacturer, or a small service-based S corporation, the time to plan is now.

Preface: “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States” – US Constitution art. I, §8, cl.1

History of the Retirement Plan, Part I

The following is the first in a series of blog posts on the subject of retirement plans. This first installment:

• • • Briefly reviews the history of government-defined retirement models in the United States,
    • Introduces the tax-deferred model, and
    • Explains the difference between Qualified plans and Individual Retirement Accounts (IRAs).

Future posts in this series will address:

• • • Limits to deductibility of retirement contributions,
    • Tax treatment of non-deductible contributions, and
    • The Roth model.

A Brief History of Government-Defined Retirement

Most Americans do not save enough for retirement. Over the years, the government has established several tax-advantaged financial models to encourage saving for retirement.

The oldest of these is Social Security, which was introduced in 1935 and is administered by the government itself. It is implemented by employers and by the self-employed. It is mandatory. Employers who do not remit payroll tax on behalf of their employees and self-employed people who do not pay self-employment tax will face stiff penalties. These additional taxes are collected by the government, which then pays benefits to individuals when they become eligible.

Tax-Deferred Plans

The next major governmental push to help Americans save for retirement was the Employee Retirement Income Security Act (ERISA) of 1974. This legislation introduced the tax-deferred model of retirement saving. This type of account is not run by the government, and it is not mandatory.

As the name itself suggests, the money in a tax-deferred account is not permanently spared from taxation; it is taxed later rather than sooner. Contributions to a tax-deferred account are not included in current-year taxable income. Furthermore, investment earnings on the contributions are not included in taxable income in the year they are earned. Rather, both contributions and investment earnings are taxed as a single income source when you withdraw money from the account after you retire.

For tax-deferred accounts, 59½ is the magic age at which you may begin making withdrawals without incurring penalties.

Example: You have $10,000 in taxable earned income. However, if you contribute $1,000 of it to a tax-deferred account, then only the remaining $9,000 is taxable in the current year.

Additionally, unlike a standard brokerage account, you do not need to worry about reporting portfolio income generated within your retirement account as it grows.

Example: You invest $1,000 in a brokerage account.

You buy $500 worth of government bonds and use the other $500 to buy stock in your favorite publicly traded corporation. The bonds pay $20 worth of interest and mature with $4 of original issue discount. The stock pays a $15 dividend. You then sell the stock for $600, resulting in a $100 capital gain.

You now have $139 of taxable income in the form of interest, OID income, dividends, and capital gains, which all need to be reported separately on your tax return.

OR

When you open the brokerage account, you check the box that says “IRA”. This makes the account tax-deferred. You then buy exactly the same stocks and bonds as above that yield $139 of the same types and amounts of income. However, since the account is tax-deferred, none of the earnings are taxable in the current year, and you don’t even need to report any of them.

When you retire and eventually withdraw money from the account, each withdrawal you make will be taxed as ordinary income. You will never have to report how much was earned from stocks vs. bonds, interest vs. dividends, etc.

The logic behind this legislation was that most people will be in their highest tax bracket during their working years and in a lower tax bracket during their retirement years. So it would be to their advantage to defer tax on some of their income and their portfolio earnings until after they retire. So, for many, if not most, people, this story will have a relatively happy ending.

Example: You invest $1,000 in a brokerage account. Over the course of your working years, it grows to a total value of $4,000.

You retire and cash out your retirement account. You now owe tax on the entire $4,000. During your working years, you earned a sizable salary and were consistently in the 22% tax bracket or above. Now that you are retired and living off your retirement earnings and Social Security, you are in the 10% tax bracket. So you pay less than half as much tax on the $4,000 as you would have during your working years.

Qualified Plans vs. Individual Retirement Accounts

ERISA defines two types of tax-deferred accounts, although they both offer the same type of tax advantage. The difference between them is who is responsible for establishing them and how much can be contributed to them.

Qualified plans are implemented by employers and have a relatively high contribution limit. Contribution limits are increased for inflation every year or so. For 2025, the limit for taxpayers under 50 is $23,500. This limit applies to all Qualified plans you participated in within the year.

The term “Qualified plan” may sound a bit vague, but this is the technical term for several types of plans you have undoubtedly heard of. The most familiar is probably the 401(k) plan made available by large private-sector employers. There are similar plans offered by state employers, such as 401(a) and 403(b).

Example: You worked one job early in 2025 and deferred $20,000 of wages to the Qualified plan offered by that employer. Later in the year, you get another job that offers a different qualified plan. Any deferral you make to the second plan beyond $3,500 will be considered an excess contribution and will incur penalties.

Deferrals to Qualified plans are taken out of your paycheck, so people don’t always think of them as “contributions”. And you don’t get to take a tax deduction on them, because the amount of the deferral is left out of the taxable income as reported by your employer. However, while the paperwork is slightly different, the result is the same as if you had included the amount in your taxable income and then deducted it.

Individual Retirement Plans (IRAs) are implemented by the individual taxpayer. IRAs have a much lower contribution limit than Qualified plans. For 2025, the limit for taxpayers under 50 is $7,000. This limit applies to the sum of contributions to all IRAs owned by an individual. Contributions to Qualified plans are subject to a separate limit and so are not considered towards the limit on contributions to IRAs.

Example: You have already maxed out your deferrals to the Qualified plans offered by the employers you worked for during 2025. You may still open an IRA and contribute the maximum of $7,000. Opening a second IRA will not allow you to circumvent this limit on IRA contributions. The limit applies to the total amount of contributions to all your IRAs.

When you contribute to an IRA, you are generally allowed to deduct the amount of your contribution from your taxable income. From a tax perspective, this has the same effect as excluding a deferral from your paycheck.

Another thing Qualified plans and IRAs have in common is that you cannot contribute more than your earned income for the year. So, if you only earned $20,000 during the year, you cannot contribute more than $20,000 to your qualified plan even if the limit is $23,500. Similarly, if you only earned $6,000 during the year, you cannot contribute more than $6,000 to your IRA, even if the limit is $7,000. This earned income contribution limit cannot be circumvented by non-earned income. So, if you win the lottery or make a lot of gains in the stock market, this does not increase your ability to contribute to a Qualified plan or IRA.

For IRAs, but not for Qualified plans, the limits can be combined for married couples. Both spouses can contribute to their respective IRAs up to the limit of their combined earned income. If a couple’s combined earned income is at least $14,000, they can each contribute $7,000. This is true even if only one spouse had earned income.

Required Minimum Distributions

Tax-deferred accounts can generally be inherited and have the same status for heirs as they had for the original owners. Meanwhile, the amount of money in the account continues to grow, and no tax is being paid on it. To reduce the amount of time that money can be rolled forward like this tax-free, the government requires that you begin distributing the money to yourself (and paying tax on it) when you reach a certain age.

This is known as a Required Minimum Distribution (RMD). The rules of RMDs are complex. They generally must be taken starting in the year in which you turn 73. The administrator of your Qualified plan or brokerage for your IRA should contact you before the year is over and tell you the least amount you must withdraw to avoid a penalty.