Our daily roundup of retirement news your clients may be thinking about.

How to avoid paying the Medicare Part D penalty
Seniors who want to get a Medicare Part D plan are expected to face a hefty penalty if they failed to sign up for at least 63 days after the initial enrollment period, according to this article in Money. However, they may be exempted from paying the penalty if they already hold “creditable” prescription drug coverage. Those who are eligible for Medicare Part D’s Extra Help program are also exempted from paying the penalty. --Money

Taxes on Social Security can be costly surprise
Many retirees are surprised to find that their Social Security retirement benefits are subject to federal income tax, according to Kiplinger. Clients who are approaching retirement are advised to determine their provisional income in retirement to know if their benefits will be taxed. The benefits are not taxable if their provisional income is below $25,000 for singles and heads of households or $32,000 for joint filers. To minimize the tax bite on these benefits, retirees need to use some tax planning, such as taking staggered IRA withdrawals and tapping Roth assets.  --Kiplinger

New drug expenses for seniors in Medicare Part D
A report from Avalere Health shows that most of the drugs covered by Medicare Part D require coinsurance, with the percentage of these drugs rising to 58% this year from 35% in 2014, according to CNBC. Medicare Part D prescription plans also are inclined to subject lower-priced drugs to coinsurance requirements, the report says. Coinsurance often leads to patients paying more out of pocket compared to fixed-dollar amount copayments, according to the article."  --CNBC

Does taking a pension in a lump sum makes sense?
Receiving a lump sum pension payment is a good option for retirees who do not expect to live long and want to give a cash gift to their lived ones before they die, according to MarketWatch. Retirees who expect a longer life span or have no need for liquid assets may opt to forgo receiving a lump sum payment or take the payment and then reinvest it for greater returns.--MarketWatch

What to know about repaying a reverse mortgage
Retirees need to make voluntary repayments to reverse mortgage to avoid substantial increase in interest and make a larger line of credit open in the future, according to Forbes. They are allowed to defer their payments if their spouse has died, they decided to relocate or sold the property. Clients who have a reverse mortgage will face no penalty for early repayment and pay no taxes for distributions from the reverse mortgage since the money is part of a loan and not treated as taxable income.  --Forbes

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