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Happy (SECURE Act) 2020!

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The Setting Every Community Up for Retirement Enhancement Act of 2019, better known as the SECURE Act, is so new that estate planners and accountants are still learning ways to plan around it to minimize the impact on existing and future clients. Following are some items to ponder as you review your estate plans through the year.

Retirement Planning

If you have earned income, your traditional IRAs will have no age cap on contributions. Consider converting all or part of your traditional IRA to a Roth IRA. Would you rather pay the taxes than have your beneficiaries pay them? Roth IRA’s have no age cap for contributions, but are subject to income limits (MAGI). Distributions are not impacted as no taxes are due. Looking for a way to keep the Medicare surcharges down?

Tax Planning

It may be that you can no longer stretch IRAs over a beneficiary’s lifetime unless they have disabilities or are chronically ill, subject to certain rules. Was your IRA payable to your trust to protect your beneficiaries? Some of the benefits of planning through a trust, with either accumulation or conduit language, allows for spendthrift (creditor) protection, the naming of contingent beneficiary, and tax, retirement & estate planning with your professional trust team for both you and your beneficiaries.

Options to Reduce or Avoid Taxes

Are you charitably inclined? Giving directly from your traditional IRA to a charity beginning at age 70½ will qualify as a charitable deduction, but not as an RMD (required minimum distribution, which is now age 72). Qualified Charitable Distributions up to $100,000 may be utilized at age 72. You could create a charitable remainder trust with an income stream to a spouse, child or other relatives with the balance to charity. Would it be beneficial to disclaim the IRA you would inherit? Can be done in part or in full (this works well if you have a contingent beneficiary and their tax bracket is lower than yours).

Helpful Tips

Review beneficiary designations, but discuss them with your trust representative before you make any changes. Consider swapping assets, where one was to be stretched out for a lifetime and the other was to be given outright. Please be sure your trust representative reviews any draft changes to your will, trust and power of attorney documents BEFORE you sign them. We have seen costly mistakes that could have been avoided by our complimentary review.

For a complimentary, private review of your estate-planning documents, call 941-475-6771.

Investments are not a deposit, not FDIC insured, not insured by any federal government agency, not bank guaranteed and may lose value.

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