Markus Andrews

If you miss a doctor’s appointment these days, you could get hit with a “no-show” fee of up to $100 — or more.
Here is what experts say about the fairness of such charges, and how to avoid them.

Eric Audras | Onoky | Getty Images

If you miss a doctor’s appointment these days, you could get hit with a “no-show” fee of up to $100 — or more.
This happened to me recently for the first time, and the charge was a steep $150. When I complained to friends and family, I learned that my experience wasn’t unusual — most had dealt with a similar fee.

I talked to experts and consumer advocates about why such fees are becoming common, if the charges are fair to patients and how to best avoid them.

Fees are a ‘disincentive’ for late cancellations, no-shows

“I very strongly support such fees,” said George Loewenstein, an economics and psychology professor at Carnegie Mellon University.
“Patients who don’t show up are taking up appointments which other patients could use,” said Loewenstein, adding that “without such a fee, patients have little if any disincentive for not bothering to cancel appointments well in advance.”
More from Personal Finance:’Gray divorce’ has doubled since the ’90s. The financial risk is high for womenHow Social Security benefits may change under Republican, Democrat proposalsHome price growth is back at pre-pandemic levels. What that means for buyers and sellers
Certified financial planner and physician Carolyn McClanahan said the fees are “totally fair.”

“If a patient doesn’t show up, that costs the practice money,” said McClanahan, a member of CNBC’s Financial Advisor Council. “The doctor and their staff is left with nothing to do and everyone still needs to get paid. Also, that empty slot is a time that another patient can get the care they need.”

Penalties shouldn’t ‘become a profit center’

Caitlin Donovan, a spokesperson for the National Patient Advocate Foundation, said “no-shows” are a reoccurring dilemma for doctors.
But, she said, “to solve this problem is not to charge patients more fees, which many can’t afford.”

She has heard of medical offices having success with call and text reminders to patients about their appointments. Patients should always be given the opportunity to bow out, she said.
That doesn’t always happen.
Earlier this month, my sister, Janna, tried to call her doctor twice to cancel her appointment for the next day.
“I was in elevator music purgatory for over 20 minutes,” she said. Both times, she didn’t get through to anyone. Three weeks later, she got a bill for a $100 “no-show” fee.
For my appointment, I did get a call the day before from the doctor’s office. But when I told the woman I’d forgotten about the appointment and couldn’t make it, she said I’d still be charged a cancellation fee.
Adam Rust, the director of financial services at the Consumer Federation of America, said using a fee to recover costs may be reasonable.
“But if penalty fees become a profit center, it may incentivize trickery and deception,” Rust said.

Isabel Pavia | Moment | Getty Images

In addition to sufficient reminders and opportunities to cancel appointments for patients, there can be other creative alternatives to “no-show” fees, Donovan said.
She recently spoke to one medical group in Camden, New Jersey, that had a problem with patients standing them up. They started asking people why they hadn’t come. Many said they just didn’t have reliable transportation to get there.
“They implemented a ride share, which came at a cost to the office, but their attendance levels went right up and more than compensated for the cost of the rides,” Donovan said.

Fees shouldn’t hurt credit, still may be worth disputing

When you make a doctor’s appointment, ask about the office’s policy around late cancellations and missed appointments, Donovan said. If you’re told you’ll be charged for missing an appointment, ask if you can reschedule it instead.
You can also try asking the office if they can waive the charge if you find it unfair or if you can’t afford it, she said. They should work with you.
“Ultimately, these fees are discretionary and I would be reluctant to work with any office that inflexibly charged them,” Donovan said.

On a practical note, debt owed to a doctor’s or dentist’s office is considered medical debt, a spokesperson for the Consumer Financial Protection Bureau told CNBC. Such debts that are less than $500 are not reported to the credit bureaus, they added.
As a result, it seems unlikely that a no-show fee would harm your credit.
When my sister Janna got her no-show invoice, she simply called the number on the bill and explained that she’d tried without success to cancel her appointment. The customer service agent agreed to waive the fee immediately.
“I feel like they have a system where they send out the bill for a no-show and then if people make the effort of calling it to question it, they’ll get rid of it,” Janna said. “But there are some people who are just going to pay it, so they bank on those people.”

Don’t miss these stories from CNBC PRO: More

Under a new rule, which goes into effect Sept. 30, food will no longer count toward calculations for eligibility for Supplemental Security Income benefits.
The change means SSI beneficiaries will no longer have to worry that the groceries or meals they receive from family or friends may reduce their monthly benefits, a disability advocate says.
The change is the first of several updates the Social Security Administration said it plans to put in place for SSI beneficiaries and applicants.

Zeljkosantrac | E+ | Getty Images

The Social Security Administration has issued a final rule that will prevent food assistance from reducing payments to certain beneficiaries.
The change applies to Supplemental Security Income, or SSI, which provides monthly checks to adults and children who are disabled, blind or age 65 and older, and have little or no income or resources.

Approximately 7.4 million Americans receive support either exclusively from SSI or in combination with Social Security.
Under the new rule, which goes into effect Sept. 30, food will no longer count toward calculations for eligibility for benefits, known as In-Kind Support and Maintenance, or ISM.
Currently, support in the form of food, shelter or both may count as unearned income for SSI beneficiaries, and therefore reduce their payments or affect their eligibility for benefits.
More from Personal Finance:Many Americans believe pensions are key to achieving the American DreamMillionaires may have hit their 2024 Social Security payroll tax limit78% of near-retirees failed or barely passed a basic Social Security quiz
The monthly maximum federal SSI amounts in 2024 are $943 for individuals, $1,415 for couples and $472 for essential persons, or those who live with an SSI beneficiary and provide care.

To qualify for SSI, beneficiaries must generally earn less than $1,971 per month from work. They must also have less than $2,000 in resources per individual, or $3,000 per couple.
That generally includes either money or other assets that can be turned into cash, such as bank accounts, bonds, property and stocks.
The new rule means SSI beneficiaries will no longer have to worry that the groceries or meals they receive from family or friends may reduce their monthly benefits, said Darcy Milburn, director of Social Security and health care policy at The Arc, a nonprofit organization serving people with developmental and intellectual disabilities.
The Social Security Administration, in turn, will no longer have to use its limited resources to document every time a beneficiary received free food and then cut their monthly benefit by as much as a third, she said.
“It represents a really meaningful step to address one of the most complex, burdensome and inhumane policies impacting people with disabilities that receive SSI,” Milburn said.

The change is the first of several updates the Social Security Administration said it plans to put in place for SSI beneficiaries and applicants.
“Simplifying our policies is a common-sense solution that reduces the burden on the public and agency staff and helps promote equity by removing barriers to accessing payments,” Social Security Commissioner Martin O’Malley said in a statement.
The new rule may help provide some relief to SSI beneficiaries as high inflation continues to prompt higher food and grocery bills for all Americans.
“People on SSI are one of the most food insecure groups in the United States,” said Thomas Foley, executive director at the National Disability Institute.
The new rule may also result in fewer overpayments or underpayments of benefits, and therefore increase financial security for beneficiaries, he said.

Congress may have the opportunity to enact bigger changes to SSI through a bipartisan bill that would raise the asset limits for beneficiaries to $10,000 for individuals, up from $2,000, and to $20,000 for married couples, up from $3,000.
“Disability affects everybody, so it’s a bipartisan issue,” Foley said.
“Restricting asset limits to the $2,000 level really impacts people’s ability to save and build a better financial future,” he said.
In December, bank CEOs including JPMorgan Chase CEO Jamie Dimon testified before the Senate that they are in favor of updating SSI’s rules.
“We have employees who don’t want us to increase their salary because if it goes over a certain amount, they can’t get that benefit which they’re entitled to,” Dimon said in December.
“This definitely should be fixed,” he said.

Don’t miss these stories from CNBC PRO: More

“Ivy Day,” which is when many Ivy League schools release admissions decisions, falls on Thursday, March 28.
A fascination with the eight private colleges that comprise the Ivy League spans decades.
It is only now, some say, that students are taking a more skeptical view.
Changes in the application process are “confusing and chaotic,” says Christopher Rim, president and CEO of Command Education.

Harvard University’s Dunster House in Cambridge, Massachusetts.
Blake Nissen for The Boston Globe via Getty Images

March 28 is “Ivy Day,” when the nation’s top schools release long-awaited admissions decisions.
A fascination with the eight private colleges that comprise the Ivy League spans decades. It is only now, some say, that students are taking a more skeptical view.

Applications for early admission at Harvard University took a sharp nosedive last fall amid multiple incidents of antisemitism on campus while backlash ensued over Harvard President Claudine Gay’s congressional testimony, which contributed to her resignation.
Yet, just weeks later, Harvard was named the ultimate “dream” school, according to a Princeton Review survey of college-bound students.
“Right now, a lot of students are still aiming for these top-tier, name-brand schools. But they really have these love-hate relationships with [colleges in the Ivy League] because they make the process so confusing and chaotic,” said Christopher Rim, president and CEO of Command Education.

A difficult year for college applicants

Few college admission cycles have been as tumultuous as this one.
In June, the Supreme Court ruled that the affirmative action admission policies of Harvard and the University of North Carolina were unconstitutional.

The ruling was considered a massive blow to decades-old efforts to boost enrollment of minorities through policies that took into account applicants’ race.
It also raised questions about the practice of giving priority to the children of alumni and requirements for standardized test scores, both of which have reinforced race and wealth gaps, research shows.
More from Personal Finance:FAFSA ‘fiasco’ could cause decline in college enrollmentHarvard is back on top as the ultimate ‘dream’ schoolMore of the nation’s top colleges roll out no-loan policies
Some colleges chose to end legacy preferences, while others, such as Princeton University, recently announced it would continue to consider legacy status in its application process.
Some schools also decided to rely less on SAT and ACT scores while others, including Dartmouth and Brown University, announced they are bringing back standardized testing requirements after relaxing them in the years since the Covid-19 pandemic began.
At Yale, students are now allowed to submit Advanced Placement, or AP, scores to fulfill the testing requirement, another move that could affect socioeconomic and racial diversity, experts say, since low-income and minority students have traditionally had less access to those classes.
“You are really giving some students an unfair advantage,” Rim said, “although it should be going the other direction right now.”

Then there is the matter of cost, especially at the highest level. Tuition and fees plus room and board for a four-year private college averaged $56,190 in the 2023-24 school year. At four-year, in-state public colleges, it was $24,030, according to the College Board, which tracks trends in college pricing and student aid.
Higher education, as a whole, is under pressure, experts say. Rising college costs and ballooning student loan debt balances have caused more students to question the return on investment. 
However, when it comes to the Ivy League, demand has remained remarkably strong, according to Connie Livingston, a former admissions officer at Brown University who is now with counseling firm Empowerly.
“They’re like the untouchables, like the elusive and exclusive Birkin bag: No matter what, people are always going to want it,” Livingston said.

What is an Ivy League degree worth?

For decades, studies have shown that earning a college degree is almost always worthwhile.
A recent report by Harvard University-based nonpartisan, nonprofit research group Opportunity Insights found that an Ivy League degree carries even more weight in the workforce and beyond.
The group of Harvard and Brown University-based economists compared the estimated future income of waitlisted students who ultimately attended Ivy League schools with those who went to public universities instead.
In the end, they found that attending an Ivy League college has a “statistically insignificant impact” on earnings.

Even attending a college in the “Ivy-plus” category — which typically includes other top schools such as Stanford University, Duke University, the University of Chicago and Massachusetts Institute of Technology — rather than a highly selective public institution nearly doubles the chances of attending an elite graduate school and triples the chances of working at a prestigious firm.
Further, it increases students’ chances of ultimately reaching the top 1% of the earnings distribution by 60%, the Opportunity Insights report found. 
“Highly selective private colleges serve as gateways to the upper echelons of society,” the researchers said.
“Because these colleges currently admit students from high-income families at substantially higher rates than students from lower-income families with comparable academic credentials, they perpetuate privilege,” they added.
Subscribe to CNBC on YouTube.

Don’t miss these stories from CNBC PRO: More

As more Americans than ever turn 65, that is no longer the traditional retirement age.
While some call for further raising the Social Security retirement age, experts say other changes may be more appropriate.

BlackRock CEO Larry Fink speaks during the New York Times DealBook Summit Nov. 30, 2022 in New York City. 
Michael M. Santiago | Getty Images News | Getty Images

The idea of raising the Social Security retirement age has one more fan: BlackRock Chairman and Chief Executive Larry Fink.
“No one should have to work longer than they want to,” Fink recently wrote in an annual letter to investors.

“But I do think it’s a bit crazy that our anchor idea for the right retirement age — 65 years old — originates from the time of the Ottoman Empire,” wrote Fink, who is 71.
Republicans have touted raising the retirement age.
Former presidential candidate Nikki Haley said she would raise the Social Security retirement age for workers in their 20s. More recently, a House Republican budget proposal also called for lifting the age threshold for Social Security, though it did not specify by how much.

The reason for the suggestion largely comes down to demographics.
In the 1950s, many people who worked and paid into Social Security never lived long enough to retire and start receiving benefits, Fink noted.

Today, the chances are higher that certain retirees over 65 may still be collecting Social Security checks until age 90, he wrote.
Meanwhile, the number of baby boomers who reach age 65 is surging to historic levels. More than 11,200 Americans are expected to turn 65 every day — for a total of more than 4.1 million per year — from now through 2027.
More from Personal Finance:Many Americans believe pensions are key to achieving the American DreamMillionaires may have hit their 2024 Social Security payroll tax limit78% of near-retirees failed or barely passed a basic Social Security quiz
That’s as Social Security is facing a looming shortfall. The trust fund used to pay retirement and survivors benefits is projected to run out in 2033, at which point there may be a benefit cut of at least 23%, Social Security’s board of trustees has projected.
“Age 65 is the anchor that is a cultural age which we have hung our retirement hat to for decades,” said Jason Fichtner, chief economist at the Bipartisan Policy Center and executive director of the Alliance for Lifetime Income’s Retirement Income Institute.
“It is no longer, I think, relevant,” he said.

How the Social Security retirement age may change

President Ronald Reagan signs the Social Security Act Amendment into law on April 20, 1983.
Corbis | Getty Images

Today, a new Social Security full retirement age of 67 is still getting phased in, prompted by changes enacted by Congress in 1983.
Full retirement age is the point at which retirees stand to receive 100% of the benefits they’ve earned.
For many years, Social Security’s full retirement age was 65. Today, that is still the age when individuals become eligible for Medicare coverage.
Social Security benefits are available starting from age 62, “but with greater reduction” as a higher full retirement age phases in, according to the Social Security Administration.
Retirees who wait to claim until age 70 stand to get the biggest benefit — with an increase of up to 8% for each year they wait past full retirement age.
Yet fewer than 10% of claimants wait until that age, notes Teresa Ghilarducci, a labor economist at The New School for Social Research and author of the book, “Work, Retire, Repeat: The Uncertainty of Retirement in the New Economy.”
As lawmakers face a deadline to make changes and address the program shortfall, they generally may choose from a limited menu of options — hiking taxes, cutting benefits or a combination of both.

Social Security full retirement age

Year of birth
Social Security full retirement age

1943-1954
66

1955
66 and two months

1956
66 and four months

1957
66 and six months

1958
66 and eight months

1959
66 and 10 months

1960 and later
67

Source: Social Security Administration

Raising the retirement age, which is often presented as another option, is really a benefit cut, notes Alicia Munnell, director of the Center for Retirement Research at Boston College.
“When you change the retirement age, it’s particularly painful to those who have to keep retiring at 62, people with health issues or people in professions where no jobs are available,” Munnell said.
Congress may eventually raise the full retirement age to 69, predicts Andrew Biggs, a senior fellow at the American Enterprise Institute, even though Democrats have promised not to make that change.
“When you look at countries around the world that have had underfunded pension systems, they raise the retirement age,” Biggs said. “It’s just a very, very common fix.”
For each year the Social Security full retirement age is increased, that would cut benefits by a little under 7%, Biggs said.
Pushing the age to 69 would repair less than one-fifth of Social Security’s shortfall, so other reforms would also be necessary, Biggs said. Moreover, a new higher retirement age would have to be phased in much faster than the 40-year window used for the last increase, he said.

Experts have other changes on their wish lists

Researchers and policy experts who have spent years studying Social Security’s shortfall have their own wish lists for the changes they would make.
Fichtner, who supports raising the retirement age, said that change would need to be paired with a higher minimum benefit, so as not to punish workers who cannot work longer.
“Some people have the ability to work, some people want to work, but some people can’t,” Fichtner said. “It’s important that we maintain a healthy minimum benefit amount at age 62.”
Increases to the retirement age could be set to automatically adjust to changes in longevity, much as the annual Social Security cost-of-living adjustments are tied to inflation, he said.

Other experts would opt for different changes in place of raising the retirement age.
Biggs advocates for moving to one flat benefit for all retirees, similar to what Australia provides. If that change were put in place, raising the retirement age would be unnecessary, he said.
Munnell argues the most effective benefit cut would be to reduce the replacement rates for higher income workers.
Ultimately, workers want to retire on their own terms — at the age they want and with enough money to live comfortably.
To make that more possible, employers need to engage older workers so they feel comfortable staying in the workforce, noted David Blanchett, managing director and head of retirement research at PGIM DC Solutions.
“There’s still potentially some implicit bias towards older Americans leaving the workforce,” Blanchett said. “If we can have a president over the age of 75 or 80, I think as a society we should be able to find more ways to accommodate older workers.” More

While rent prices increased in March, it’s reflecting seasonal patterns and fundamental concepts such as supply and demand, experts say.
Some markets in the country are cooling more than others. Prices in the Sun Belt and inner mountain areas are seeing prices come down, and this state is an example.

Ascentxmedia | E+ | Getty Images

Rent prices for one- and two-bedroom apartments grew in March for the first time in six months.
The monthly cost for a one-bedroom apartment across the U.S. bumped up to $1,487, a 0.3% increase from February. The price of a typical two-bedroom apartment also jumped 0.5% to $1,847, according to a new report by Zumper, a real estate data site. 

While prices are up overall, some metro areas saw declines. For example, the rent price for a one-bedroom apartment in Baltimore, Maryland, is $1,390, down 0.7% from a year ago, per Zumper.
Arizona is unique, with rent decreases in all the major metro areas assessed. On a statewide level, the median price for one-bedroom apartments declined to $1,311 in March, about a 4% decline from $1,365 a year ago, according to Zumper data.
The broader rental market’s slight increase in prices may be a reflection of old seasonal patterns, experts say.
“It’s kind of expected,” said Crystal Chen, a spokeswoman for Zumper. “When we get to the warmer months, that’s when demand picks up.”
More from Personal Finance:How to use rent reporting services to improve creditThree ways Gen Zers can build credit before renting their own placeWhat to know about about a condo and a co-op apartment

“During the colder months of the year … the rental market tends to be cool,” said Jacob Channel, a senior economist at LendingTree. “As we get closer and closer to summer, we start to see rent prices increase in more places.”
Yet, some fundamental factors such as supply and demand may also be reflected, said Susan M. Wachter, a professor of real estate and finance at The Wharton School of the University of Pennsylvania.

Why Arizona prices are coming down

Some markets in the country are cooling more than others. Prices in the Sun Belt and the intermountain areas are coming down, and Arizona is a prime example, Chen said. Zumper defines the intermountain region as Arizona, Nevada and Colorado.
“All of the Arizona cities on our report either had flat or declining year-over-year rates,” she said.
The city of Glendale, for example, had the largest rent decline, with one-bedroom prices down over 10% from this time last year.

Arizona has a lot of supply coming online, keeping rent prices down in the area, Wachter explained.
“In the data, there’s some evidence of fundamentals at play, in addition to seasonality,” she said.
Phoenix is expected to add more than 33,000 new units available this year and many buildings in the state are offering concessions, such as waived deposits or application fees and up to two months of free rent, Zumper found.
“If you’re in that market, it’s a great time for renters to snag an amenity-rich apartment that would have been out of reach otherwise,” Chen said.

Supply plays into rent prices elsewhere

While more supply is expected to surge in the Sun Belt and the intermountain region, a lot of Midwestern and Northeast markets are undersupplied, making rent prices push upward.
“The supply coming online absolutely does vary by market,” Wachter said.
Rent prices for one-bedroom apartments are up 25% in New York City from a year ago, according to Zumper. Rent costs and high competition also plague areas such as Columbus, Ohio, and Norfolk, Virginia.
Yet, while prices increased, they’ve significantly declined from a year ago and even more compared with the market volatility from 2021 and 2022, when pent-up demand kept prices high.
“Rent prices are going up and they are expensive, but it’s not suddenly skyrocketing again,” Channel said.
“We don’t expect to see national rates spike at all like in 2021 and 2022,” Chen said. “The seasonality is coming back after two crazy years.”

While many factors affect housing affordability in the U.S., the main one, in simplest terms, is poor supply, Channel said.
“The more rental units that are built, the lower prices are likely to go, and I think Arizona shows that really well,” he said. More

iFi AI will try to crack the code of integrating artificial intelligence and investing, and it will be mostly focused on helping individual traders make buy and sell decisions.
IBM’s watsonx powers the AI programs behind the new venture.
The new company will face competition from other AI-related startups and Wall Street giants in trying to marry the new technology with trading.

Traders work on the floor at the New York Stock Exchange on March 13, 2024.
Brendan McDermid | Reuters

A new company will try to crack the code of integrating artificial intelligence and investing, and it will be mostly focused on helping individual traders make buy and sell decisions.
The firm, called iFi AI, launches Wednesday. The company will use AI models to help generate projected returns for stocks over various time periods, according to Ron Insana, iFi AI CEO and CNBC senior analyst and commentator.

“It’s a big assist when you’re looking at making a decision on whether or not you want to buy a stock, and you get a forecasted rate of return that says it’s going to be up 3% in the next month,” Insana told CNBC. “There’s some comfort around the decision-making process, knowing also that there’s more data going into our forecast than any human can ingest in a given day.”
IBM’s watsonx powers the AI programs behind the new venture, incorporating fundamental news, technical analysis and other factors to make projections about where stocks are headed. The AI programs are already being used to help make decisions with $6 billion that is managed institutionally, Insana said.

There will be multiple levels and price points for iFi AI, with most aimed at self-directed traders and a top tier, with broader portfolio tools, built for financial advisors, according to Insana.
Using high technology in finance was common well before the latest wave of AI, but Insana said the new programs are more dynamic than the types of quantitative strategies that have long been used in hedge funds.
“The difference between quantitative analysis and AI-driven analysis is that AI learns and continues to learn and teach itself,” Insana said.
The new company will face competition from other AI-related startups and Wall Street giants in trying to marry the new technology with trading. For example, Morgan Stanley named its first head of AI earlier this month.

Don’t miss these stories from CNBC PRO: More

There is a winner for the $1.128 billion Mega Millions jackpot, and all six numbers matched a ticket sold in New Jersey.
The lucky ticket holder can expect an automatic federal withholding of 24% and state withholding of 8%, but the final bill will be millions more.

Xavier Lorenzo | Moment | Getty Images

There is officially one winner for the $1.128 billion Mega Millions jackpot — and the taxman will take a sizable share, experts say.
A single ticket sold in New Jersey won the game’s fifth-largest grand prize after matching all six numbers drawn Tuesday night, Mega Millions announced Wednesday. The final jackpot dropped from an estimated $1.13 billion to $1.128 billion based on actual ticket sales.

The lucky winner will choose between two options: an annuitized prize worth $1.128 billion or a lump-sum payout of $536.6 million cash.
More from Personal Finance:An ‘often overlooked’ retirement savings option can lower your tax bill, advisor saysWomen experience a ‘motherhood penalty.’ For dads, there’s a wage ‘bonus’48% of voters say student loan forgiveness is key 2024 election issue: survey
Regardless of the payout option, “you’re losing almost half of it” to taxes, said Albert Campo, a certified public accountant and president of AJC Accounting Services in Manalapan, New Jersey.
New Jersey taxes prizes over $10,000 and the winner will owe millions to the state, including a mandatory withholding, on top of their federal tax bill, he said.
Eight states, including California, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming, do not levy income taxes on lottery winnings.

How much the winner could owe in taxes

Before seeing a penny of the jackpot, the winner will pay a 24% mandatory upfront federal withholding to the IRS.
If they choose the $536.6 million cash option, the 24% withholding automatically reduces the prize by about $129 million.
However, the jackpot pushes the winner into the top federal tax bracket, which is 37% for 2024, Campo said. After the 24% withholding, the winner could still owe another 13% in federal taxes, or about $70 million.

Of course, these are rough calculations. The winner’s federal tax bill will also depend on other income, credits or deductions.
As for state taxes, New Jersey automatically withholds 8% for payouts of more than $500,000, which will cost the winner about another $43 million up front. The state withholding covers “a big chunk,” but New Jersey’s top tax bracket is 10.75%, Campo said.
“None of these winners really think about taxes” until there’s a hefty share going to the IRS and state government, said Andrew Stoltmann, a Chicago-based lawyer who has represented several lottery winners.

The Mega Millions is not the only way to win big. The Powerball jackpot has reached an estimated $865 million without a big winner from Monday night’s drawing. The chances of scoring the grand prize for that game are roughly 1 in 292 million.

Don’t miss these stories from CNBC PRO: More

Women and Wealth Events
Your Money

A spousal IRA is a separate Roth or traditional IRA for a non-working spouse — and it’s “often overlooked,” according to certified financial planner Judy Brown at SC&H Group.
Married couples who file jointly have until the federal tax deadline — April 15 for most taxpayers — to make 2023 IRA contributions for each spouse.
Traditional pretax spousal IRA contributions can provide a 2023 tax break, depending on income and workplace retirement plan participation.

10’000 Hours | Digitalvision | Getty Images

There’s still time to lower your 2023 tax bill or boost your refund with a lesser-known retirement savings strategy for married couples.
One requirement for individual retirement account contributions is “earned income,” such as wages or salary from a job or self-employment earnings. But there’s an exception for single-income households: the spousal IRA.

A spousal IRA is a separate Roth or traditional IRA for the non-working spouse — and it’s “often overlooked,” according to certified financial planner Judy Brown at SC&H Group in the Washington, D.C., and Baltimore area.

More from Women and Wealth:

Here’s a look at more coverage in CNBC’s Women & Wealth special report, where we explore ways women can increase income, save and make the most of opportunities.

These accounts can provide a current-year tax break and boost retirement savings for nonearning spouses. As of 2021, some 18% of parents didn’t work outside of the home and most stay-at-home parents were women, according to Pew Research Center.
“My advice to [nonearning] women would be make sure you’re at least doing that spousal IRA,” said Boston-based CFP Catherine Valega, founder of Green Bee Advisory.

My advice to [nonearning] women would be make sure you’re at least doing that spousal IRA.

Catherine Valega
Founder of Green Bee Advisory

How the spousal IRA works

Married couples who file jointly have until the federal tax deadline — April 15 for most taxpayers — to make 2023 IRA contributions for each spouse, assuming there’s enough earned income for the combined deposits.
Traditional pretax spousal IRA contributions can provide a 2023 tax break, depending on income and workplace retirement plan participation, explained Brown, who is also a certified public accountant.  

With income phaseouts for IRA deductibility and Roth IRA contributions, many wait until March or April for the previous year’s IRA deposits. It can be a “game-time decision” while doing your taxes, Brown said. 

The annual IRA contribution limit is $6,500 for 2023 or $7,500 for savers age 50 and older. The limit increased to $7,000 for 2024, with an extra $1,000 for investors age 50 and up.
However, “it doesn’t have to be all or nothing,” Brown said. Even a $500 or $1,000 spousal IRA contribution could provide tax savings.

Contributions could create a ‘tax problem’

While spousal IRA contributions make sense for some couples, there are other factors to consider before making deposits, said CFP Laura Mattia, CEO of Atlas Fiduciary Financial in Sarasota, Florida.For example, some couples need the extra cash for living expenses or shorter-term goals, like paying for a wedding, she said.Plus, too much pretax retirement savings could create a “tax problem” in the future, depending on the size of your accounts and future required minimum distributions, Mattia said. Pretax withdrawals boost income, which can affect Medicare Part B and Part D premiums, among other consequences.”It’s a puzzle and really depends on a lot of things,” she added.

Don’t miss these stories from CNBC PRO: More