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08/05/2026

Is Social Security broke? 6 big retirement misconceptions

Social Security won’t be there when I retire:
Anyone who follows Social Security news knows the retirement trust fund faces a fiscal cliff. More money is going out of the trust fund than coming in. If Congress doesn’t act, the federal program will run short of cash by 2032. News reports warn that Social Security is running out of money, going broke. That language is figurative and imprecise, but many Americans take it literally. In fact, when the reserve runs out, if nothing is done, the federal agency will have sufficient funds to pay about 83% of full benefits, according to an estimate from AARP.
There’s a big difference between 83% and zero, but many Americans don’t see it.

I won’t need long-term care:
The long-term care industry serves people who cannot perform everyday activities, like dressing or eating, without help. And more than 80% of Americans will need that help at some point, according to a study from the Center for Retirement Research.
Yet, most Americans seem to think they won’t need long-term care.
Medicare covers long-term care
One 2025 survey by Nationwide found that 58% of U.S. adults wrongly believe
Medicare covers long-term care:
But Medicare generally does not cover longer stays. The reason: Most long-term care is not considered medical care.
Imagine what you go to the hospital for. That’s what Medicare covers.

You need $1 million to retire:
Magic numbers might serve as a useful guidepost, in an era when American workers are expected to save for their own retirement.
Most retirees have nowhere near $1 million in savings. Millions of Americans retire comfortably on Social Security income alone.

I won’t need stocks in retirement:
Retirees often assume they have no more need of long-term investments, like stocks.
That misapprehension relates to another: The idea that retirement doesn’t last very long.
Retirees commonly underestimate how long they will live. A woman of 65, for example, is likely to live another 22 years.

My taxes will be much lower in retirement:
As a general rule, Americans can expect a lower tax rate in retirement. Your income typically drops. Retirees tend to spend less. Not all Social Security income is taxed. But retirees might be surprised at how much tax they do pay.
Withdrawals from traditional 401(k) and IRA accounts are taxed as income. Consider Social Security, pensions and other income, and some retirees find themselves in a higher bracket than they expected.

Here is the full article:
https://www.usatoday.com/story/money/personalfinance/2026/07/22/retirement-myths-social-security-medicare-ira-401k-stocks/90994305007/

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07/27/2026

When Is a Roth Conversion a Bad Idea? 6 Situations Retirees Should Consider Carefully
Roth conversions get a lot of buzz for being a powerful tax-saving tool, but there are several situations where taking that leap might actually cost you more in the long run.
https://www.kiplinger.com/taxes/tax-planning/times-that-a-roth-conversion-is-a-bad-idea-for-retirees

Roth conversions have recently become one of the most popular retirement tax planning strategies. Financial headlines often promote them as a way to create tax-free income, reduce future required minimum distributions (RMDs) and leave a more tax-efficient legacy to heirs.

For many retirees, those benefits are real.

But Roth conversions aren't a one-size-fits-all solution. In fact, as a CERTIFIED FINANCIAL PLANNER® and CEO of Peak Retirement Planning, I can tell you that converting retirement assets at the wrong time can result in paying more taxes than necessary and reduce your long-term wealth.

The key question isn't whether Roth conversions are good or bad; it's whether paying taxes today will save you on taxes in the future (I wrote a bestselling book all about taxes — you can request a free copy here).

Below are six situations where retirees may want to think twice before converting.

1. You don't have a pension
One of the biggest factors in determining whether a Roth conversion makes sense is your expected future tax bracket. For retirees without a pension, their future taxable income is often lower than it was during their working years, as many rely primarily on Social Security and modest withdrawals from retirement accounts.

As a result, they could remain in relatively low tax brackets throughout retirement.

Today's tax code also includes a generous standard deduction (up to $32,200 for 2026). For some retirees, that deduction might shelter most or even all of their taxable income.

If you expect to stay in a lower tax bracket for life, voluntarily accelerating taxes through a Roth conversion might not provide as much benefit.

By contrast, retirees with substantial pensions often face a different reality. Pension income can create a permanent tax floor that follows them throughout retirement, making Roth conversions far more attractive in certain cases.

2. You have less than $500,000 in tax-deferred accounts
Your account size matters. When evaluating Roth conversions, it's important to consider future RMDs. Starting at age 73 (or 75 for many younger retirees), the IRS requires withdrawals from traditional IRAs and other tax-deferred retirement accounts.

However, smaller account balances produce smaller RMDs.

For example, a retiree with $500,000 in a traditional IRA might have an initial RMD of roughly $20,000. Combined with the standard deduction and other available tax benefits, that withdrawal could have little impact on their overall tax situation.

If your retirement savings aren't large enough to create a meaningful future tax burden, converting assets today could mean paying taxes earlier than necessary without generating significant long-term savings.

3. Your tax rate today is higher than it will be in retirement
At its core, a Roth conversion is a tax-rate arbitrage decision. You're choosing to pay taxes now because you believe you'll pay the same or even a higher rate later. This strategy falls apart if the opposite is true.

Consider someone in their peak earning years who is currently in the 32% federal tax bracket. If they have no pension and moderate retirement savings, they may eventually find themselves in the 12%, 22% or even lower brackets after they retire.

In that scenario, converting assets while working could mean prepaying taxes at a significantly higher rate than what would have been owed later.

Before converting, retirees should estimate their likely retirement income rather than assuming their future tax rate will automatically be higher.

4. You're planning to retire early
One reason not to do Roth conversions today is that you could have a better opportunity later. Early retirement often creates what planners call a "tax window": A period after earned income stops but before Social Security, pensions and RMDs begin.

For example, someone retiring at age 58 might have several years when taxable income drops dramatically. During those years, they can often perform Roth conversions in much lower tax brackets than they could while working.

This window can be particularly valuable because it could allow retirees to:

Convert assets before Social Security becomes taxable
Avoid increasing Medicare premiums tied to higher income
Fill lower tax brackets more efficiently
Reduce future RMDs
Rather than converting aggressively during high-income working years, some retirees may benefit from waiting until these lower-income years arrive.

5. Your children might be in lower tax brackets than you
Many Roth conversion discussions focus on leaving tax-free assets to heirs. This can be an advantageous legacy planning strategy, but it isn't always the right answer.

Today's inherited IRA rules generally require most non-spouse beneficiaries to empty inherited retirement accounts within 10 years. Because of this rule, many parents assume they should convert everything to Roth accounts, but there are considerations to think about.

The better question is: What tax bracket will your children be in when they inherit the money?

If your children have higher incomes than you, significant retirement savings of their own or expect to remain employed during those 10 years, Roth conversions may make more sense because each of these could result in your children paying more taxes down the road than you would have paid.

But if they're likely to be in lower tax brackets than you, allowing them to inherit traditional IRA assets could result in a lower tax bill being paid across generations.

Legacy planning shouldn't focus only on your tax rate, but should also account for the tax situation of the people who will ultimately receive the assets.

6. You're single today but expect to marry
Tax brackets are not static. A single retiree who expects to get married in the near future could gain access to larger tax brackets and a higher standard deduction through married-filing-jointly status.

In some situations, waiting until after marriage to perform Roth conversions can create additional flexibility and allow larger conversions at lower effective tax rates.

This isn't a common planning strategy, but it's one that can be overlooked when evaluating conversion opportunities.

Bonus consideration: You're moving to a lower-tax state
State taxes can significantly influence the math behind a Roth conversion. Someone working in a high-tax state, such as California, may pay an additional 7% to 10% or more in state income taxes on converted dollars.

If that same person plans to retire in Florida, Tennessee or another state with no income tax, waiting would likely generate sizable tax savings.

In some cases, the difference between converting before and after a move can amount to tens of thousands of dollars.

The bottom line
Roth conversions can be an incredibly effective tool, especially for retirees with pensions, large tax-deferred balances and concerns about future taxes. But the goal isn't to convert simply because Roth accounts sound attractive. The goal is to minimize your lifetime taxes.

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A Roth conversion is a powerful tax-saving tool, but there are several situations where taking that leap might actually cost you more in the long run.

07/22/2026

Yay for good news!
Citing the increase in the cost of fuel, the IRS has set a higher optional standard mileage rate used to calculate the deductible costs of operating an automobile for business for the remainder of 2026.

Announcement 2026-11 modified Notice 2026-10. It revised the optional standard mileage rates for computing the deductible costs of operating an automobile for business, medical, or moving expense purposes and for determining the reimbursed amount of these expenses that is deemed substantiated.

The American Automobile Association reported that the average price for regular gasoline was $2.819 a gallon on Jan. 8, and $3.890 on July 15, an increase of 38%.

The revised standard mileage rates, effective July 1, are: 76 cents per mile for business, an increase from 72.5 cents, and 23.5 cents per mile for medical and moving purposes, up from 20.5 cents per mile for each. The mileage rate that applies to the deduction for charitable contributions is fixed under Sec. 170(i) of the Internal Revenue Code at 14 cents per mile.

All other provisions of Notice 2026-10 remain in effect.

The last midyear adjustment of the standard mileage rate was in 2022.

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07/17/2026

The IRS announced it will soon automatically abate three types of penalties — failure to file, failure to pay, and failure to deposit — for taxpayers with a history of timely compliance.

The new process, called automatic exemption from penalty (AEP), replaces the long-standing first-time abatement (FTA) process, the IRS said in a Wednesday news release.

In November, National Taxpayer Advocate Erin Collins, who heads the Taxpayer Advocate Service (TAS), announced the IRS’s intention to automatically apply first-time abatement at the AICPA National Tax Conference.

“For years, too many eligible taxpayers missed out on first-time penalty relief simply because they did not know it was available, did not understand how to request it, could not get through to the IRS, or did not have a tax professional advising them,” Collins said Wednesday in a blog.
“In fiscal year 2025, nearly 220,000 taxpayers received FTA relief through the manual process,” she wrote. “TAS estimates that if AEP had been in place for the same period, over 1.5 million taxpayers would have received penalty relief.”

Program details
AEP, expected to begin this summer, will apply to eligible original returns beginning with tax year 2025 and 2026 quarterly returns, as well as future tax periods, the IRS said. Taxpayers qualify if they have a history of timely filing the return and paying any tax due in the three prior years (or 12 consecutive quarters for quarterly returns).

When taxpayers qualify, penalties are not assessed during processing for failure to file, failure to pay, or failure to deposit. The IRS will apply AEP for eligible taxpayers and issue a notice confirming that the relief was granted.

Not all returns are eligible. For example, information returns and returns that are filed only in response to specific transactions or infrequent events generally are not eligible.

During the transition from the FTA process to the new one, some qualifying taxpayers may still receive penalty notices for eligible tax year 2025 and 2026 quarterly returns. Taxpayers who believe they qualify may contact the IRS to request First Time Abate.

AEP provides relief automatically and will replace FTA for eligible returns with original due dates on or after Jan. 1, 2027. Taxpayers may visit the administrative penalty relief page for more information.

Other penalty relief
Taxpayers who do not qualify for AEP may still request penalty relief based on reasonable cause. The IRS will review those requests and notify taxpayers of the outcome.
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07/15/2026

In more than 20 years of teaching family enterprise, I’ve observed one fear that dominates all others among parents—entitlement.

Entitlement is defined as the “unjustified assumption that one has a right to certain advantages or preferential treatment.”

This represents the opposite of what entrepreneurial parents hope their success provides for their children. While it is possible that success in one generation leads to entitlement in the next, it’s not inevitable if you take a thoughtful, strategic approach.

Why you shouldn’t purchase success
As parents or families experience entrepreneurial success, the focus often becomes how best to use the resources gained to support the next generation. Wealth is spent on benefits such as safety and security, learning and education, health and wellness, and wide-ranging experiences for the rising generation.

The goal is to increase the likelihood of success, fulfillment, and even happiness. None is negative. But problems arise when parents’ efforts to purchase opportunities lead to a focus on the outcome at the expense of the process. If parents are not careful, hiring tutors, coaches, teachers, and consultants or buying travel experiences and other luxuries can lean toward “purchasing success” rather than setting children up for opportunities.

The difference between the two might seem trivial. It’s not.

Opportunity promotes effort, uncertainty, and growth as the next generation seeks to reap the benefits of opportunities provided. Purchasing success implies none of these. Success without effort and risk bypasses the learning process, resulting in a next generation with all the perks and none of the capability—just another way to define entitlement.

How to prevent entitlement
To prevent entitlement, focus your efforts and those of the next generation on the process of growth, not just the outcome. Outcomes must be understood as the result of a process, not of a transaction.

To accomplish this, you’ll need to embrace some of the things you might have hoped the next generation could avoid because of the success of the family enterprise.

Here are four interrelated ways to embrace the process of growth.

1. Embrace uncertainty
To begin without knowing the end is what gives life meaning. Families should embrace the fact that nothing is guaranteed and that it takes effort and grit to achieve meaningful things. You might make the team, you might earn an A on the calculus test, and you might get into your school of choice—or you might not.

Similarly, you might be successful in your venture, but you might not, even if you do most things right.

The only certain path is inaction. Embracing uncertainty is embracing action, experimentation, and growth, which leads to confidence, capability, and growth.

2. Embrace failure and imperfection
The fact that outcomes can’t be controlled implies that failure is inevitable at some point. Not only is it inevitable, but failure and imperfection can be among the greatest opportunities to learn and grow.

Unfortunately, families often teach the next generation to avoid or to be embarrassed by failure, robbing them of the opportunity to learn through setbacks and falling short.

Thomas Edison is famously quoted as saying, “I’ve not failed, I’ve just found 10,000 ways that won’t work.”

Embracing failure as an opportunity to learn can minimize its negative effects and enhance the positive.

3. Embrace hard work
Edison was a great example of the rewards of hard work, and this is among the largest factors if not the largest factor in success. Most people can’t excel in school without studying. Practice is the cornerstone of success in athletics.

Any entrepreneurial venture will take long hours to have any chance of success. The hard work promotes grit, resilience, knowledge, capability, and pride, and there’s simply no substitute for it.

So look for opportunities that will ensure the next generation has to put in the work in multiple domains.

4. Embrace the long road
It’s a marathon, not a sprint, to get somewhere meaningful. Focusing on the process is a recognition that getting from Point A to Point B will take time. The more valuable is the outcome, the more time and effort it will take to get there, most likely.

Families are often in a hurry to see the next generation succeed, given the family’s success. This rush, while understandable, can put too much emphasis on the outcome. Families should embrace the journey and celebrate that progress, even if it is slow. It represents time well spent.

Success shouldn’t be purchased for rising generations in family enterprises. When families fall into that trap, it is much more likely to lead to entitlement.

Instead, embrace the process that leads to success, as this will create a growth mindset and sustainable capabilities that will pay dividends well into the future.

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07/01/2026

IRS offers gift tax safe harbor for contributions to Trump accounts

The IRS on Monday issued Rev. Proc. 2026-25, which provides a gift tax reporting safe harbor for individual donors who make one or more contributions to Trump accounts under Sec. 530A and satisfy certain conditions.

If the conditions are met, contributions will be treated as completed gifts that are not future interests in property and to which the annual per-donee gift tax exclusion applies, the IRS said. Covered taxpayers will not have to file gift tax returns reporting these contributions.

Trump accounts are a new type of individual retirement account for eligible children under Sec. 530A, which was added to the Internal Revenue Code by H.R. 1, P.L. 119-21, known as the One Big Beautiful Bill Act.

A $1,000 contribution from the federal government is available under Sec. 6434 for eligible children born after Dec. 31, 2024, and before Jan. 1, 2029. Eligible individuals are generally children with a Social Security number who have not yet reached the calendar year in which they turn 18 years old prior to the election to open a Trump account.

As of June 4, the IRS said, it had received nearly 6 million elections to open a Trump account.

In March, the IRS issued proposed regulations under Sec. 530A (REG-117270-25) that provide guidance on how to open initial Trump accounts and proposed regulations under Sec. 6434 (REG-117002-25) that provide details on the pilot program for the $1,000 donation.

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06/17/2026

About a quarter of callers to two IRS lines got poor service, TIGTA says.

About one-fourth of callers to two IRS telephone lines during three months in 2025 did not receive quality customer service, a watchdog report dated June 10 said.

“Recurring quality issues could lead to chronic service deficiencies and diminished taxpayer satisfaction,” the report from the Treasury Inspector General for Taxpayer Administration (TIGTA) said.

The IRS agreed with the three recommendations TIGTA made in its report.

TIGTA said it listened to 200 recordings of calls to Compliance Services and Accounts Management telephone lines from Feb. 15, 2025, to May 15, 2025. Of those, 52 callers, or 26%, did not receive quality customer service, the report said.

Those two phone lines received 3.8 million calls during the three months, TIGTA said. Extrapolating data from its “statistically valid sample,” TIGTA said, about 1 million total taxpayers did not receive quality service. A lack of quality customer service included dropped, disconnected, or improperly transferred calls; extensive hold times; inaccurate information provided; and discourteous service.

TIGTA estimated that 18% (more than 250,000) of the almost 1.4 million taxpayers who called Compliance Services did not receive quality service and that 34% (more than 800,000) of the almost 2.4 million taxpayers who called Accounts Management did not receive quality service.

Because of a previous TIGTA report that identified similar issues, IRS management told TIGTA that it provided training in February to emphasize the importance of professional and courteous service.
The Taxpayer Bill of Rights on the IRS home page says that taxpayers should receive prompt, courteous, and professional assistance; should be spoken to in a way they can easily understand; and should receive explanations of IRS laws, procedures, and decisions about their tax accounts.

The IRS agreed with the following TIGTA recommendations, which said that the IRS should:

Revise Internal Revenue Manual Section 21.1.1, Accounts Management and Compliance Services Overview, to require representatives to document all types of dropped or disconnected calls, or calls that were not properly transferred, including the circumstances of the disconnection when known.
Emphasize to all representatives the importance of following hold time requirements, handling calls properly (e.g., using appropriate tone, avoiding jargon, etc.) and asking probing questions to ensure compliance with procedures and ensure that callers receive good customer service.
Evaluate recurring quality-of-service issues identified by Taxpayer Services’ internal quality reviews, identify areas of improvement, and implement procedural changes or additional training to reduce their recurrence.
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06/05/2026

How tighter student loan caps will affect higher education
Beginning in July, federal student loan reforms will reshape how students finance higher education. The changes introduce new borrowing limits, eliminate certain loan options, and distinguish between graduate and professional degrees when determining how much students can borrow. Most provisions take effect July 1, 2026, and apply to federal loans first disbursed for the 2026–2027 academic year.

Existing students are protected from many of these changes, which will apply mostly to members of incoming classes (see the helpful PDF chart prepared by the National Association of Student Financial Aid Administrators).
Undergraduate student loan limits remain unchanged
Although many of the recent student loan reforms have focused on graduate borrowing, undergraduate financing remains the foundation of federal student aid programs (along with community colleges and trade, career, or technical schools, which are not the focus here). Federal Direct Loans continue to serve as the primary borrowing option for undergraduate students and, here, the caps remain unchanged.

Annual loan limits vary by the student’s year in school and dependency status. Broadly speaking, dependent undergraduate students can borrow up to $5,500 in their first year, up to $6,500 in their second year, and up to $7,500 per year during their third and fourth years. Independent students have higher limits and can borrow up to $9,500 in their first year, up to $10,500 in their second year, and up to $12,500 per year during their third and fourth years. Lifetime undergraduate borrowing is capped at $31,000 for dependent students and at $57,500 for independent students. These borrowing limits have remained largely unchanged for many years and are not indexed for inflation, which is one reason they cover a smaller share of college costs today than they did in the past.

Several considerations determine a student’s dependency status, which, as noted, affects these caps. Section 480(d) of the Higher Education Act of 1965 (20 U.S.C. §1087vv(d)), as amended, defines an “independent student” as an individual who meets any of the following criteria:

24 years of age or older.
Married.
Has legal dependents other than a spouse.
Enrolled in a master’s, doctoral, or professional degree program.
Veteran or currently serving on active duty.
Emancipated minor or in legal guardianship.
Orphan, in foster care, or a ward of the court after turning 13 years old.
An “unaccompanied,” self-supporting homeless youth or at risk of becoming one.
Certain other unusual circumstances apply.
Because federal loan limits rarely cover the full cost of attendance, undergraduate students typically finance the remaining costs through a combination of scholarships, grants, family contributions, savings plans such as 529 accounts, part-time employment, and, in some cases, Parent PLUS or private student loans. For many students, though, undergraduate borrowing represents the first step in financing higher education and can influence whether they later pursue graduate study.

New federal loan limits for graduate study
One of the most significant policy changes in 2026 involves new borrowing limits for graduate and professional students. Under prior rules, graduate students could combine Direct Loans with Graduate PLUS Loans, which allow borrowing up to the full cost of attendance. Beginning in 2026, however, the Graduate PLUS Loan program is eliminated for new borrowers.

Moving forward, graduate students will rely primarily on Direct Loans with stricter borrowing caps. Most graduate programs, including accounting, will be limited to $20,500 per year and $100,000 in total lifetime borrowing for graduate study. However, those enrolled in a narrow set of professional degree programs (i.e., medicine, dentistry, law, etc.) will have higher borrowing limits — $50,000 per year and $200,000 in total lifetime borrowing for professional study.

Under the previous system, federal loans could be taken out up to a school’s cost of attendance, which includes living expenses such as housing and food. The new borrowing caps are no longer tied to the cost of attendance. As such, students may need to rely on other resources to cover the full cost of both tuition and living expenses.

Additional changes affecting families
The 2026 reforms also introduce new limits for Parent PLUS loans. Historically, parents could borrow up to the full cost of attendance for a dependent student’s undergraduate education, less other financial aid received by the student. Beginning in 2026, Parent PLUS borrowing will be capped at $20,000 per year per student, with a lifetime limit of $65,000 per student.

Parent PLUS loans have long served as a supplemental financing option when student loans, scholarships, and other aid do not fully cover college expenses. Because the loans are issued to parents rather than students, repayment responsibility rests with the parent borrower. In some cases, families have relied heavily on Parent PLUS loans to cover tuition at higher-cost institutions.

As a result of the recent changes, some families may need to consider alternative financing strategies, such as scholarships, savings plans, or lower-cost educational pathways when planning for how to pay for a student’s college education.

Implications for accounting education
The effects of these policy changes will vary across fields of study. Professions that involve graduate education for licensure, such as accounting, may be particularly affected. Despite the professional nature of the field and the licensure requirements associated with becoming a CPA, accounting degrees are not classified as professional degrees under a final rule issued by the Department of Education in May on the new federal student loan framework (see “Dept. of Education Releases Final Rule on Professional Degree Programs,” JofA, May 5, 2026). Professional degree programs under the applicable definition generally involve degrees that signify entry into professional practice, such as law, medicine, pharmacy, dentistry, and theology. The Department of Education determined that accounting programs do not fall within that definition, and as a result, most graduate accounting programs, including master of accountancy (M.Acc.) and master of business administration (MBA) degrees designed to help students reach the 150-credit traditional education pathway to CPA licensure, fall under the standard graduate borrowing limits of $20,500 annually and $100,000 in total federal loans.

Alternatives to student loans
Federal student loans are only one component of higher education financing. Scholarships and grants remain among the most valuable sources of financial aid because they do not require repayment. Employer-sponsored tuition-assistance programs can also play a role in graduate education, as some accounting firms financially support employees pursuing graduate coursework or meeting CPA licensure education requirements.

Students may also use 529 college savings plans and state-sponsored prepaid tuition plans to fund education expenses. In addition, many students offset costs through part-time employment and experiential employment opportunities, including teaching assistantships and internships. Following advocacy by the AICPA, 529 college savings plan rules have been expanded to allow certain postsecondary credentialing expenses, including those associated with the accounting profession.

While private student loans are also an option, they often have less-desirable interest rates, fewer borrower protections, and more limited repayment flexibility than federal student loans.

or find the article here: https://click.e2.aicpa.org/?qs=ABB7InYiOjEsImQiOjQ4OTZ9AAcAAAAAAjqT5F-OJVwJZr5FPkosJOxSQA0ah1rnSOzrM4MygmXn-bPVDAJKcBfNhiqa2c9Pk_P-MCKa7auLqtcBXSJ8GzltXAPqC40VrtuyUU2dovLcM0A

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