How to make retirement saving a priority

Dear Liz: One thing I like about saving for retirement with an IRA is that I can wait until April 15 of the following year and then just contribute a lump sum for whatever I can afford to put in that year. Is there anything similar with 401(k)? Or do I have to have the contributions come out piecemeal with payroll deductions? I keep revising the percentages, but then there is a lag time between when I revise and when that money is taken out. It is a hassle. It would be much easier to just make a lump sum contribution at the end of the year to my 401(k).

Answer: Many people have unpredictable incomes and variable expenses that make planning tough. If you have a steady paycheck, though, you’d be smart to pay yourself first by making your retirement contributions a priority.

It’s generally smart to contribute at least enough to get the full company match, even if that means cutting back elsewhere. Matches are free money that you shouldn’t pass up. If you can contribute more, even better. For many people, retirement plan contributions are one of the few available ways they can still reduce their taxable income.

If you discover after the end of the year that you could have put in more, you can still make a lump sum contribution to an IRA. Since you have a plan at work, your contribution would be fully deductible if your modified adjusted gross income is less than $64,000 for singles or $103,000 for married couples filing jointly. The ability to deduct the contribution phases out so that there’s no deduction once income is above $74,000 for singles and $123,000 for couples.

Consult a pro when planning elder care

Dear Liz: My parents and I are discussing the best ways to protect their assets if one of them must live in a nursing home. Their home is paid off, and we were wondering if adding my name on the deed will secure the home from a mandatory sale for caregiving expenses. Please note, I am the only child. Also, I may want to live there someday to care for the other parent. Looking for the best options for saving money and avoiding inheritance tax for this asset.

Answer: Please consult an elder law attorney before you take any steps to “protect� assets because the wrong moves could come back to haunt you (and your parents).

It sounds like you’re contemplating the possibility that one of your parents may wind up on Medicaid, the government health program for the poor that covers nursing home costs. Medicaid has a very low asset limit and uses a “look back� period to discourage people from transferring money or property just so they can qualify. In most states, transfers made within 60 months of the application are examined and, if found to be in violation of the rules, used to determine a penalty period to prevent someone from qualifying for Medicaid coverage. In California, the look-back period is 30 months.

The state can attempt to recoup Medicaid costs from people’s estates by putting liens against their homes. You might see that as an “inheritance tax,� but inheritance taxes are taxes imposed in a few states on people who inherit money or property. Although all states try to recoup Medicaid costs, only six — Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania — have inheritance taxes, and these either exempt or give favorable rates to children who inherit.

Having your name added to the deed can cause problems, as well. Your creditors could go after the home if you’re sued, and you could lose a portion of the step up in tax basis you would get if you inherited the house instead. If you’re married and get divorced, your portion of your parents’ home could be considered a “marital asset� that has to be divided.

It’s great that you and your parents are trying to plan for long-term care, but you should seek out professional guidance.

Liz Weston, certified financial planner, is a personal finance columnist for NerdWallet. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact� form at asklizweston.com. Distributed by No More Red Inc.