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