
How The SECURE Act Changes Your Retirement!
Transcript:
00:07
hey guys Mike Frontera here back with
00:10
another retirement Theory video well
00:13
it's official the much-anticipated
00:15
secure Act has been signed into law and
00:18
there are some big changes in store for
00:20
you there were a plethora of changes
00:22
made with everything from IRAs 401 k
00:25
plans 529 accounts and more and not
00:28
every change was a big one so I'll save
00:30
you some time and go over the ones that
00:31
are likely to be the most impactful and
00:33
for shorthand I'll be calling 401 K 403
00:37
B 457 and IRA accounts IRAs just know
00:42
that when I do I'm referring to all of
00:43
these different retirement plan types
00:45
okay so let's start with IRA required
00:48
minimum distributions or RMDs
00:50
you know that money that you have to
00:52
start taking out at 70 and a half who
00:55
came up with that odd age anyway well
00:57
now they've moved it to 72 and if
01:00
nothing else this should make it easier
01:02
to figure out what year you need to
01:04
start taking money out of your account
01:05
but it's sure to bring up the question
01:08
well what if I turn 70 and a half and
01:11
2019 do I now get to skip a year and
01:13
start withdrawals again in 2021
01:16
no such luck the rule only applies if
01:19
you turn 70 and a half in 2020 or later
01:22
and nothing has changed yet regarding
01:25
the RMD calculation itself though there
01:28
are some rumblings that this calculation
01:30
may soon be revised to reflect longer
01:32
life spans and assuming it is the RMD
01:36
amounts will decrease slightly each year
01:38
a bigger change with RMDs however are
01:41
for those that occur after death for
01:43
those of you who may stand to inherit or
01:46
may pass on an IRA our MDS will no
01:50
longer be able to be stretched across a
01:53
beneficiary's lifetime
01:54
instead non spouse beneficiaries who are
01:58
more than ten years younger than the
02:00
deceased IRA owner will now generally be
02:04
required to drain the entire IRA account
02:07
within 10 years what's interesting about
02:11
this is that the annual
02:13
RMD will be gone too so in theory a
02:17
beneficiary could take nothing out for
02:20
nine years and take the entire IRA
02:23
balance out in a lump sum in the tenth
02:25
year for beneficiaries who may be
02:27
working but plan to retire in the next
02:30
few years this could provide at least
02:32
some withdrawal planning to wait until
02:35
their income is lower before drawing
02:37
down their inherited IRA it may also
02:41
increase the popularity of Roth IRA
02:43
conversions for those looking to pass on
02:45
an IRA an IRA owner may wish to slowly
02:49
convert their IRA to tax-free Roth year
02:53
by year rather than force their children
02:55
to take presumably larger withdrawals
02:58
over a ten year or less period couple
03:03
final side notes on this under previous
03:06
law seventy and a half mark both the age
03:10
at which our MDS would start as well as
03:12
which I when IRA contributions must stop
03:17
this restriction has been lifted so as
03:19
long as you have the earned income there
03:22
is now no age limit for making IRA
03:25
contributions also the increased our mdh
03:29
to 72 does not affect the age for which
03:32
qualified charitable distributions or
03:35
cue CDs are able to be made those are
03:38
still available for folks seventy and a
03:40
half years or older but tricky tidbit
03:42
though you're eligible QED CDs will be
03:45
reduced by the cumulative total of post
03:48
age seventy and a half IRA contributions
03:51
so if you contributed say five thousand
03:54
dollars a year to an IRA for three years
03:57
after you're 70 in year seventy and a
03:59
half your maximum QCD would be reduced
04:02
from a hundred thousand down to
04:04
eighty-five thousand by the way would
04:07
you like to know more about those and
04:09
other smart ways to donate to charity
04:11
check out my video from June of 2019 now
04:16
a couple of bones were thrown into the
04:19
mix here for tax payers - seems like
04:23
it's more for younger folks
04:25
so the
04:26
first is that your IRA withdrawals of up
04:30
to $5,000 can be taken at any age
04:33
without penalty for the qualified birth
04:36
or adoption of a child and there is no
04:39
limit on the number of children that
04:43
this exemption is available to so if you
04:45
have 10 kids it's $50,000 you can pull
04:47
without tax penalty don't know how much
04:50
that would help in that case but it's
04:52
there not only that but if you take that
04:55
withdrawal you actually have the ability
04:57
to pay your IRA back your maximum
05:01
eligible contribution will be increased
05:04
by the amount of your withdrawal in the
05:07
year you choose to pay those funds back
05:10
to your IRA the other bonus is that you
05:14
can now pay down up to ten thousand
05:17
dollars in student loan debt
05:19
using your 529 account now that $10,000
05:23
is a lifetime limit so choose carefully
05:25
for New York State residents who have
05:27
student loans this brings up a potential
05:30
way to cut your state income tax bill
05:33
presumably you could contribute up to
05:36
ten thousand dollars to a 529 plan and
05:38
immediately draw the funds out to put
05:42
toward your student loans by doing so
05:44
you can snag a state income tax
05:46
deduction just to pay a bill you're
05:49
already obligated to pay and remember
05:52
that's a $5,000 per individual limit for
05:57
New York State's tax deduction in a New
05:59
York State plan ten thousand for a
06:02
couple again there are a lot of changes
06:05
within the secure act and I've only
06:07
touched on a handful of them if you have
06:10
questions on these changes or you want
06:12
to know more about the other changes let
06:15
me know give me a call at five one eight
06:18
six six seven to zero to two or better
06:21
yet come visit me at WWE chairman Theory
06:25
comm do you follow me on Facebook I
06:27
think that you should you'll see videos
06:31
like these and stay up to date on
06:33
everything retirement planning once
06:36
again thank you for joining me see you
06:38
next time
06:46
you