facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause
%POST_TITLE% Thumbnail

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
Check the background of this firm/advisor on FINRA’s BrokerCheck.