The Setting Every Community Up for Retirement Enhancement (SECURE) Act, passed in December 2019, increases access to workplace plans 401K plans, other retirement savings accounts, and expands retirement savings. The retirement legislation includes policy changes that will impact defined contribution (DC) plans, defined benefit (DB) plans, individual retirement accounts (IRAs) and 529 plans.
I am not a tax adviser, it's time to call them and polish the crystal ball.
I am not a tax adviser, it's time to call them and polish the crystal ball.
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Changes:
If you are unable to make a contribution at this time, you will have the ability to contribute via your preferred funding method soon. The deadline to make a Current Year 2020 contribution is April 15th, 2021.
So why would most want to add more money in after age seventy when your earning power has probably ended or decreased? This really is a way to shelter income for your children beneficiaries by spreading the tax gain over ten years after you die. Here is how:
For those who inherited an IRA from an original IRA owner who passed away prior to January 1, 2020, no changes to your current distribution schedule are required. However, for situations where the original IRA account owner passes away after December 31, 2019, fewer beneficiaries will be able to extend distributions from the inherited IRA over their lifetime. Account owners need to plan to withdraw all assets from the inherited IRA within 10 years following the death of the original account holder. Exceptions to the 10-year distribution requirement include assets left to a surviving spouse, a minor child, a disabled or chronically ill individual, and beneficiaries who are less than 10 years younger than the decedent. Hmm wonder if this passed because Trump has children?
This change will require some investors to reevaluate their retirement and/or estate planning strategies. While some beneficiaries may qualify for exemptions to the 10-year rule, others will be required to draw down assets more rapidly than required under the current rules. However, it is important to note that anyone who inherited an IRA from an original account owner who passed away prior to January 1, 2020, can continue their current distribution schedule.
My 529 plan for college is now depleted. I am so proud I was able to save for my children's college education. We were able to make it without loans until this past year, which is the last year - yippee!
The next stage of my life is to keep earnings high, contribute the maximum to IRA and 401k if matched, and figure out where I want to live in a single story house for the next thirty years. Big goals for 2020.
Mortgage rates remain low. It makes sense to invest in real estate in locations that are desirable and there is demand. With rates in the three and four percent you can still hold on to money better than a CD at 2 % . But the question is where is the stable location that won't see a decline? I say stay coastal if you can afford it, and single family.
My crystal ball says:
Pay off credit card debt
Don't buy on credit cards
Keep driving the older car
Refinance to lower if you can
Grow a garden
Save 20% of what you earn
How is your financial planning shaping up for the next decade?
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| Royalty as a Bee |
