Recent Tax Changes
Congress has made several changes – mostly good – to the rules surrounding retirement plans. In the popular press, these changes are often called the SECURE Act.
We are incorporating these changes into your financial plans, so there is nothing you need to do immediately. In your upcoming meeting we will discuss whether any changes may affect you. Some of the key changes include:
- Required Minimum Distributions now begin at age 72 instead of 70½ for those younger than 70 ½ at the end of 2019. This may provide tax planning opportunities for your financial plan that we will discuss in our next meeting.
- Clients over age 70½ with earned income will be advised on whether to contribute to a Traditional IRA (or make back-door contributions to a Roth IRA), which is made possible by the new law.
- Clients who care for an elderly person may be permitted to save more into their IRAs or even create a defined contribution retirement plan.
- Clients who have named a non-spouse (trust, child, other family member, etc.) as the beneficiary of a retirement account will be advised to revisit their estate plans due to changes to the taxation of inherited IRAs with respect to those who pass away in the year 2020 or beyond.
- A few clients may wish to contribute for the first time to a 529 savings plan, or revisit the way they support (grand)children’s education goals, as these accounts may now be used for apprenticeships and up to $10,000 of student loan repayment.
- Some of our entrepreneurial clients and business owner clients will explore new incentives and options for company retirement plans.
- Clients whose minor children have substantial unearned income will discuss changes to the Kiddie Tax.
- Clients with 401(k)s are likely to see annuity options appear in their plans over the coming years, which would require careful review.
There are many other changes to the tax law. Rest assured we will alert you during your next client meeting to changes that may affect you.For those who really love the nitty-gritty details of the new law, you can click here to read more. For everyone else, we’ll talk more at your next client meeting!