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Financial And Tax Planning For The Long Run

(Tuesday, June 30, 10 p.m. EST) After paying a terrible price in lost lives, suffering, and grief, the Covid economic crisis will pass, along with emergency tax relief in the history-making $2.2 trillion CARES Act of 2020. The tax law with us permanently, and the rules that will be affecting you every year for years to come, is the SECURE Act.

Signed by President Donald J. Trump on December 20, 2019 the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE) Act mandates non-spouse beneficiaries of IRAs deplete their accounts within 10 years of inheriting a federally qualified retirement account. A non-spouse beneficiary may be your child, grandchild, nephew or niece, or other family members you want to support after you're gone.

New Retirement Income Planning Choices. SECURE Act encourages using more lifetime income annuities to secure retirement. While this may be good generally, there is one huge caveat: annuities can be expensive. Lifetime income backed by an insurance company's creditworthiness makes for a great sales pitch but are best advised on by a professional who places your best interest above all else, including the sales commissions they will earn.

Business Owner Tax Breaks. SECURE Act also makes it less expensive and easier for business owners to establish and administer "safe harbor" retirement plans, including , boosting the "gig economy," and making part-time workers eligible for employer retirement plans. 

Delaying Distributions Until Age 72. Postponing required minimum distributions (RMDs) 18 months is another idea you may want to consider. The SECURE Act lets you delay RMDs on IRAs, effectively extending the benefit of compounding. Instead of requiring you to begin depleting your retirement account at age 70½, you can now delay it until age 72. This small change can amount to big bucks because your IRA can compound without being taxed for an extra 18 months. Deferring taxes for 18 months on a large IRA is a no-brainer, if you can afford it. Implementing this step in your retirement income plan should be part of your overall strategy to outlive your money and create a legacy for your family.

The SECURE Act and other tax reforms passed before the CARES Act make tax and financial planning more important to individuals who are about to retire or who recently retired. Weighing SECURE Act's sweeping tax implications as well as Covid- 19 emergency tax relief provisions in CARES Act making Roth IRA conversions more attractive requires detailed knowledge of your personal situation. Please contact us with your questions.


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Index
Anomalous Financial Economic Conditions Of The Covid Crisis
Three Easy Ways To Increase Your Chance Of Financial Success
Act Before The Tax Pendulum Swings Back
Act By The End Of 2020 For A Major Retirement Income Tax Break
Business Owner Alert: Main Street Lending Program Offers Covid Aid
A Constellation Of Facts Squarely Aligns With 2020 Roth IRA Conversions
Covid-19 Tax Break Suspends Required Minimum Distributions
PPP Update For Business Owners
Business Owner Alert: Covid-19 Retirement Loans
Coronavirus Tax-Breaks For Individuals; Details Emerge From IRS
Coronavirus Tax Planning Alert
Amid The Awful News, Some Good Signs
How Negative Interest Rates In Germany Limit Pandemic Economic Damage To U.S.
The Current Economy And Outlook For May And June
To Fight The Financial Crisis Spawned By The Coronavirus, The Fed Is Utilizing Powerful New Tools

This article was written by a professional financial journalist for Excomp Asset Management, Ltd. and is not intended as legal or investment advice.

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