As the new year unfolds, we find ourselves again under new tax laws that create a need for many people to review and amend different areas of their financial and wealth planning. The SECURE Act, officially named the “Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019,” is seen as the first major retirement savings law in many years. It passed into law during December 2019 and became effective January 1, 2020. From a policy perspective, the goal of the SECURE Act is to encourage savings. Many of its provisions are aimed at making retirement accounts and plans available to a wider range of individuals. For those who already have retirement accounts, the most relevant changes center around the new rules related to contributions and eventual distributions, including what is required to happen, and when, with retirement accounts as they are inherited by beneficiaries.
Some of the key issues we will be tackling with our clients are the Act’s new rules related to the following (and likely other) planning issues:
- Making retirement plan contributions even after age 70½
- Delaying the start of required minimum distributions (RMDs) to age 72 from age 70½
- The consideration of other tax-advantageous options for distributions before RMDs begin (for example, discretionary distributions or Roth IRA conversions)
- Helping to process qualified charitable distributions (QCDs) from IRAs for those over 70½, especially if they may not otherwise receive as advantageous a tax deduction for a gift of taxable assets
- The rethinking of IRA beneficiaries, as most non-spouse beneficiaries will no longer be able to “stretch” their inherited IRA distributions over their own lifetimes, but instead need to fully distribute inherited IRA money within 10 years
- The review of conduit trusts as IRA beneficiaries and looking at new estate planning options
- New rules for penalty-free withdrawals of IRA money for family events (birth or adoption) and expanded qualified withdrawals from 529 Plans (such as the payment of sibling student loan debt)
Over the next couple of months, we’ll be diving deeper into a number of the major impacts of the SECURE Act in a series of Insight blogs. But if you find yourself in any of these situations, then this will be an important time for us to review the status of your retirement account and estate plan. Your Litman Gregory advisor can guide you through this process and work with your tax and estate professionals to help determine how this impacts you, and what the best solutions are for your goals. We encourage you to contact us with any questions about your specific situation.
LGAM is an SEC registered investment adviser with its principal place of business in the state of California. LGAM and its representatives are in compliance with the current registration and notice filing requirements imposed upon registered investment advisers by those states in which LGAM maintains clients. LGAM may only transact business in those states in which it is noticed filed, or qualifies for an exemption or exclusion from notice filing requirements. Any subsequent, direct communication by LGAM with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of LGAM, please contact LGAM or refer to the investment adviser public disclosure web site (www.adviserinfo.sec.gov). For additional information about LGAM, including fees and services, send for our disclosure brochure as set forth on Form ADV using the contact information herein.
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LGWM is an SEC registered investment adviser with its principal place of business in the state of California. LGWM and its representatives are in compliance with the current registration and notice filing requirements imposed upon registered investment advisers by those states in which LGWM maintains clients. LGWM may only transact business in those states in which it is noticed filed, or qualifies for an exemption or exclusion from notice filing requirements. Any subsequent, direct communication by LGWM with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides.
