RetireHappily

Ask These 3 Questions Before Every Decision. Contact Us: https://retirehappily.net/15-minute-phone-call-with-a-financial-advisor/ ACE: Adapt, Control, Exit In retirement, every decision you make that affects your income taxes, your investments, and your estate plan can have significant consequences. But things change, so once you make those decisions, they probably aren’t going to serve you well forever. Managing change in retirement is often a retiree’s biggest challenge. Your personal situation changes, the economy changes, and financial tools change. This is why a proper solution strategy and flexibility to adapt and adjust with changing situations, markets, and tools is so important. The proper strategy includes: A collection of appropriate financial tools that has the highest probability that you will look back on your choices and be pleased, and the lowest probability that you will look back on your choices with regret. An income tax cost strategy that minimizes tax expenses and gives you flexibility. An estate planning strategy that controls who has the privilege of tending to you as you age, and where your stuff goes when you get your promotion. Being able to adapt and adjust—and having confidence in your ability to adapt and adjust your solution strategy over time—is paramount. To make sure you’re on track to retire happily, ask yourself three important questions every time you get ready to make a decision that affects your finances. You can remember these three questions easily by using the acronym ACE—adjust, control, and exit. Adapt/Adjust as You Age: How does this choice create flexibility for me to adapt and adjust to my changing situation in the future? This especially comes into play as you age. How am I able to adapt and adjust over time? Things change, depending on how you age. You may not age as well as what you had hoped. Retirement plans can change depending on your family situation. Changes can occur if something is happening with one of your children, your grandchildren, or your spouse. With all of these issues, you want to be able to adapt and adjust over time. With every decision you make, you want to be mindful of having more options and have more ability to adapt and adjust as you age. Control or Freedom: How is this choice giving me more control and/or more freedom? In every decision that you make, you should be asking yourself, how is this decision giving me more control or more freedom? The primary intention of an Estate Plan is to give you control. It gives you control of who has the privilege of helping you as you age, and it gives you control of where your stuff goes when you get your promotion (pass on). Paying attention to your income tax costs can allow you to control your tax cost. Exit Strategy: When this choice has run its course, or if I change my mind or just want out, how do I get out and what will it cost me? With every decision, think about your exit strategy. If I buy an investment or set up a legal plan and later I decide I don’t like it, what is my exit strategy? How do I get out of this? Even with your current investments, what is the exit strategy? How do you know it has done well? How do you know when it is time to change? How do you know when it is time to add? Know your exit strategy. Ask these three questions before every decision. https://retirehappily.net/ace-this-will-keep-you-out-of-trouble/

Part-Timers Get to Contribute to Retirement in the Secure Act rules. If you are working part-time, the thought of saving may seem a bit overwhelming. Respect the potential of the seed with the new Secure Act rules. Want the Secure Act explained as simply as possible? Get the Secure Act Roadmap: https://retirehappily.me/secure-act Self Access Your Retirement Plan: https://retirehappily.net/5-minute-retirement-makeover/ Guard the Seed I want to tell you a story. When I was a young man, a mentor friend of mine gave me an important demonstration on the power of a seed. He held out an apple in his hand and asked me what it was and what it could be. I replied, “It is an apple. And… I guess it could be, a snack, a pie, maybe applesauce, or cider. Is that what you mean?” “What else could this be?” he asked. Not sure where he was going with this; I said, “Well, I guess it could be anything made from apples.” He looked at me with big excited eyes for a moment. Then, he turned, pointed out the window, and said, “Look. the seeds in this here apple can be that whole apple orchard right there. In fact, when I was a boy your age, that is all it was. A few seeds from a few apples and now look at it!” Why is this important? If you are working part-time, the thought of saving may seem a bit overwhelming. However, it is vitally important to respect the potential of the seed. The Rule Section 111. Allowing Long-term Part-time Workers to Participate in 401(k) Plans Under current law, employers generally may exclude part-time employees (employees who work less than 1,000 hours per year) when providing a defined contribution plan to their employees. As women are more likely than men to work part-time, these rules can be quite harmful for women in preparing for retirement. Except in the case of collectively bargained plans, the bill will require employers maintaining a 401(k) plan to have a dual eligibility requirement under which an employee must complete either a one year of service requirement (with the 1,000-hour rule) or three consecutive years of service where the employee completes at least 500 hours of service. In the case of employees who are eligible solely by reason of the latter new rule, the employer may elect to exclude such employees from testing under the nondiscrimination and coverage rules, and from the application of the top-heavy rules. This is another great benefit for everyone to take control of tax costs and sow seeds for the future. If you are a lower earner, or part of the 44% of Americans that do not pay tax, you should consider putting this into a Roth IRA or partially converting your IRA to a Roth IRA. Read this article on our website: https://retirehappily.net/parttime/ Contact Us: https://retirehappily.net/15-minute-phone-call-with-a-financial-advisor/

The Required Minimum Distribution (RMD) was raised to age 72 in the Secure Act. This will give you more flexibility in years to come as you manage your income tax costs. This is not to be confused with a Roth Contribution. Want the Secure Act explained as simply as possible and how it relates to your retirement plan? Get the Secure Act Roadmap: https://retirehappily.me/secure-act Self Access Your Retirement Plan: https://retirehappily.net/5-minute-retirement-makeover/ Why is this important? An income Tax Saving opportunity is created by adding years to the RMD. You now have 2 more years to control your income tax costs by saving more OR putting money into a Roth using a Partial Roth Conversion. This will give you more flexibility in years to come as you manage your income tax costs. Partial Roth Conversion Note: This is not to be confused with a Roth Contribution which has income requirements and restrictions. This is not an ‘all or nothing’ decision. You can choose any amount. That is why it is called Partial. It can be any amount regardless of income or account size. However, you will have to pay tax on the amount you convert. The Rule Section 113. Increase in Age for Required Beginning Date for Mandatory Distributions Under current law, participants are generally required to begin taking distributions from their retirement plan at age 70 ½ . The policy behind this rule is to ensure that individuals spend their retirement savings during their lifetime and not use their retirement plans for estate planning purposes to transfer wealth to beneficiaries. However, the age of 70 ½ was first applied in the retirement plan context in the early 1960s and has never been adjusted to take into account increases in life expectancy. The bill increases the required minimum distribution age from 70 ½ to 72. Good News! You can wait nearly two more years to start taking the mandatory distributions from your IRA accounts. If it is money you don’t need, you have two more years to do a partial Roth conversion to control your income tax cost. This is likely the beginning of cascading changes coming in the near future as you will see in the Bonus Tip below. Ask your CPA or us how you may be able to benefit from this change in Required Distributions. Bonus Tip The IRS just released in November 2019 proposed updates to the Life Expectancy and Distribution Period Tables, which, if finalized, would also provide some relief to retirees by reducing the amount of RMDs owed each year to allow money to last longer in retirement. According to the EBRI report, it appears that a one- to two-year change in RMD beginning date would only have perhaps a 2% to 4% change in total Required Minimum Distributions. Rest assured, as we further evaluate this new piece of retirement legislation; we will continue to give you insights on what you need to know to not miss out on the opportunities that you may benefit from. Read this article on our website: https://retirehappily.net/age72/ Contact Us: https://retirehappily.net/15-minute-phone-call-with-a-financial-advisor/

Is the Stretch IRA dead because of the new rules in the Secure Act? The SECURE Act ends the stretch IRA. All of those plans have to be reviewed and probably revised. Stretch IRAs for those who died before 2020 are still good. Want the Secure Act explained as simple as possible? Get the Secure Act Roadmap: https://retirehappily.me/secure-act Self Access Your Retirement Plan: https://retirehappily.net/5-minute-retirement-makeover/ Why is this important? Controlling how much you pay in income tax, can make a substantial difference in your finances. Because of marginal income tax rates, not every dollar you earn is taxed the same. In fact, 44% of Americans pay zero tax, while the top 10% of earners in American are responsible for 70% of all the federal income tax revenue. That is staggering! Talk about ‘fair share”. What is fair about nearly half of America not paying taxes yet having use of all the benefits in this great country? Paying attention to your taxable income cost will keep you from paying more than your fair share. Managing the consistency of your income tax costs will likely save you many thousands of dollars. A significant way to save is by using all 10 years to cleanse the tax costs from the tax-deferred IRAs or with the Roth IRA. By doing this, you will let the account grow tax-free for all 10 years before transitioning it to a Non-Qualified account. The SECURE Act eliminates the stretch IRA and replaces it with a 10-year payout deadline for most beneficiaries. The clients most affected are those with the largest IRAs who had planned on leaving the balance of those accounts to extend over the lives of their children and grandchildren. This especially includes any clients who named a trust as their IRA beneficiary. These trusts may not work well under the new rules. These estate plans need to be readdressed immediately. The Rule The SECURE Act ends the stretch IRA. All of those plans have to be reviewed and probably revised. Under the now “old rules” (before 2020), an individual designated beneficiary could extend post-death “stretch IRA” required minimum distributions over his lifetime. A young grandchild might have a 70-year payout period. But Not Anymore 1- Are the current stretch IRAs for those who died before 2020 still good? Yes, they are grandfathered. 2- Does this kill stretch IRAs for all beneficiaries? No. The law carves out exemptions for certain beneficiaries now called eligible designated beneficiaries, or EDBs. Eligible designated beneficiaries are: Surviving spouses. Minor children, up to majority – but not grandchildren. Disabled individuals – under the strict IRS rules. Chronically ill individuals. Individuals not more than 10 years younger than the IRA owner (generally, siblings around the same age). 3- Do grandchildren qualify as minors for the EDB exemption? No. The law is clear on this. The EDB exemption from the 10-year rule is only for the child of the IRA owner or the plan participant. 4- How do the RMDs work under the 10-year rule? Are there RMDs during the 10 years? No. Under the 10-year rule, there are no annual specified Required Minimum Distributions (RMDs) during the 10 years. Instead, the entire IRA balance must be emptied by the end of the 10 years. Beneficiaries can withdraw any amounts they wish over the 10 years, so beneficiaries do have some planning flexibility during the 10 years to withdraw funds when it best fits their tax situation during that time. 5- Do Roth IRAs still qualify for the stretch? No. This is an unfortunate big deal for tax and estate planning. Until a few weeks ago, all money in a Roth IRA was able to grow tax-free for the lifetime of the saver AND the lifetime of each beneficiary of the Roth. Now, inherited Roth IRAs are subject to the same 10-year payout rule (except that the distributions will generally be tax-free). Savers will want to consider doing more Roth conversions to eliminate what could be a big tax bill within 10 years after death. And beneficiaries of the Roth should leave as much of the money in the account as possible. This will allow the funds to grow tax-free for the next 10 years after the death of the original owner. Read this article on our website: https://retirehappily.net/stretch/ Contact Us: https://retirehappily.net/15-minute-phone-call-with-a-financial-advisor/

Start saving for retirement while in college and compound interest with the new Secure Act rule. Want the Secure Act explained as simply as possible? Get the Secure Act Roadmap: https://retirehappily.me/secure-act Self Access Your Retirement Plan: https://retirehappily.net/5-minute-retirement-makeover/ Habit & Compounding My grandfather frequently told me “You can’t learn it any younger!” And so, it is with saving. The sooner you start, the more you will have because of two very powerful forces; Habit & Compounding. Have you heard me tell the seed story? If not, it’s because we are just beginning our journey together. If you have, you know how impactful the story is. When I was a young man, a mentor friend of mine gave me an important demonstration on the power of a seed. He held out an apple in his hand and asked me what it was and what it could be. I replied, “It is an apple. And… I guess it could be, a snack, a pie, maybe applesauce, or cider. Is that what you mean?” “What else could this be?” he asked. Not sure where he was going with this; I said, “Well, I guess it could be anything made from apples.” He looked at me with big excited eyes for a moment. Then, he turned, pointed out the window, and said, “Look. the seeds in this here apple can be that whole apple orchard right there. In fact, when I was a boy your age, that is all it was. A few seeds from a few apples and now look at it!” Why is this important? Unfortunately, saving is often not as easy as it sounds. Getting started can be the hardest part. Let me repeat that- Getting started, can be the hardest part. Subsequently, you may not feel like you are saving a lot. You may get yourself feeling discouraged. You may think to yourself, “what difference can $20 a week make?” But over time, it will make a massive difference. Compound Effect Starting at age 20 with only a 6% average rate of return will yield you more the 2.5x more in your account at the age of 65 than if you wait until age 35 to start. Saving Habit When you are used to saving, it becomes a habit, and little by little, you can increase your contributions. Soon, you will not even notice it’s gone. The Rule Section 105. Treat Certain Taxable Non-Tuition Fellowship and Stipend Payments as Compensation for IRA Purposes Stipends and non-tuition fellowship payments received by graduate and postdoctoral students are not treated as compensation and cannot be used as the basis for IRA contributions. The legislation removes this obstacle to retirement savings by taking such amounts that are includible in income into account for IRA contribution purposes. The change will enable these students to begin saving for retirement and accumulate tax-favored retirement savings. This is great news to benefit from the long term effects of compound interest. It may not seem like a lot in a student’s budget, but the early seeds are the ones that produce the most fruit. And it is rewarding to have some skin in the game early. Read this article on our website: https://retirehappily.net/compound/ Contact Us: https://retirehappily.net/15-minute-phone-call-with-a-financial-advisor/

Uses for 529 Funds Include student loans, private schools, siblings, apprenticeships, alternative schooling & more. Want the Secure Act explained as simply as possible? Get the Secure Act Roadmap: https://retirehappily.me/secure-act Self Access Your Retirement Plan: https://retirehappily.net/5-minute-retirement-makeover/ Keep the Tax Free Advantage - 529 Plans Explained Jacob, as a 16-year-old only child, was enjoying life with his father until the day his dad announced that he had fallen in love with Sarah. Jacob would be getting a stepbrother and two stepsisters. Jacob’s father, being a single parent since Jacob was two, had planned well for his son’s future. He had saved diligently into Jacob’s 529 and over the last 14 years. The $50,000 he saved had grown to $193,000, and it would all be tax-free for Jacob’s college expenses. However, Jacob did not plan to go to college. He instead was planning on going to join his father’s heating and cooling business as soon as he graduated high school. Until the SECURE Act passed, the $143,000 gain on his father’s investment would have been taxed when he took it out. Other than the qualified expense, of approximately $2,700, Jacob needs for tools in his apprenticeship, he would not have a qualified college expense. The SECURE Act added a great benefit for this blended family. They get to keep the tax free advantage of the 529 and have the flexibility to use it for Jacob’s step-siblings private school, apprenticeships, or college. Why is this important? In the last decade, 529 plans have begun to lose their luster because the traditional role of a ‘college education’ is being transformed and the usage rules were confined to tuition, housing, meal plans, books, and fees. If the earnings were withdrawn for ineligible costs, they were subject to income tax and a penalty. But now, the new rules of the 529 can make it much more advantageous. What is the 529? The 529 plan allowed tax-free growth on contributions to the future ‘college fund’ and has recently been expanded into options such as student loans, apprenticeships, sibling student loans, and alternative schooling. Student Loans In the past, students would use the 529 plan to pay for school as they go. This makes sense; but in doing so, if a family member is helping them with expenses, it could limit the amount of aid eligibility. Distributions can be considered untaxed student income on the FAFSA (Free Applications for Federal Student Aid) and may reduce the aid by 50%. This can be avoided by waiting until January 1st of the student’s sophomore year of college to take 529 distributions because it no longer applies to the qualification stipulations. Apprenticeships This a fantastic option! To be qualified as an approved apprenticeship, the program must be registered with the Department of Labor under the National Apprenticeship Act. This is a great way to benefit from ‘on the job training’ with this tax-advantaged account and have money for fees, textbooks, supplies, equipment, and tools. Sibling Student Loans Let’s make an example of Jacob … It’s not just for Jacob anymore. Jacob’s brothers, sisters, (if he had them) stepbrother and stepsisters can all benefit from Jacob’s 529 account. Each related sibling can be a beneficiary of Jacob’s account. The siblings and step-siblings could receive money for homeschool, private school, apprenticeships, college, or $10,000 each from Johnny’s 529 for college debt. Alternative Schooling With the growth of the private, religious, and homeschooling networks, you don’t have to wait until college to take advantage of the tax-free benefits of the 529 plan. The Rule Section 302. Expansion of Section 529 Plans The legislation expands 529 education savings accounts to cover costs associated with registered apprenticeships, homeschooling; up to $10,000 of qualified student loan repayments (including those for siblings); and private elementary, secondary, or religious schools. Expanding the use of the 529 plan is encouraging. In the world of education is in a time of great transition. The days of apprenticeships being only for skilled trades labor are over. In today’s world of highly specialized focus and accessible training, internships and apprenticeships are starting to become a replacement for the traditional four-year college degree. It remains to be seen what specifically qualifies for this new use, but this is good news. Warning Something to take note of with the 529 plans, there are often limitations on where and how the funds can be invested. Read this article on our website: https://retirehappily.net/529s/ Contact Us: https://retirehappily.net/15-minute-phone-call-with-a-financial-advisor/

Ease Financial Demands If you can imagine for a moment, my friends John and Jenny, newlyweds of only three months. Jenny and John were trying to be smart by diligently saving for their retirement. They worked on getting their finances to begin what they’d eventually hope to be a family of six. But then, their plan came to a screeching halt. John got laid off from his job, and two weeks later, Jenny found out they were pregnant. The lay-off and the pregnancy felt like double trouble. Fortunately, the SECURE Act allows them to get $5,000 each from their retirement plans without penalty to ease the financial demands of starting a new family. They expect to be the proud parents of a baby born in October of 2020. To help with the expenses, Jenny takes a $5,000 withdrawal from her 401(k) plan. And, John takes $5000 from his IRA. All penalty-free. And if they are able in the future, they can replace the money they took out. More to come on this. Want the Secure Act explained as simply as possible? Get the Secure Act Roadmap: https://retirehappily.me/secure-act Self Access Your Retirement Plan: https://retirehappily.net/5-minute-retirement-makeover/ Why is this important? Becoming a new parent can put a severe financial strain on families whether through adoption or pregnancy. As a result of the SECURE Act, each parent is able to take up to $5,000 per person from a company savings plan or IRA. New parents can choose to repay the money into the retirement account, however, this is not a loan but a penalty-free withdrawal. When Can this be done? A distribution is qualified if it is made from an IRA or company plan within one year of the date of birth or the date on which the adoption is finalized. There is a $5,000 lifetime (not annual) limit per birth or adoption on penalty-free withdrawals. How is this done? Talk to your CPA or call us to ensure you are doing it right. It should be pretty straight forward but you know the old saying “Measure twice, cut once”. Bonus The birth or adoption distribution amount can be repaid at any future time (re-contributed back to any retirement account). The Rule Section 112. Penalty-free Withdrawals from Retirement Plans for Individuals in case of birth or adoption. The legislation provides for penalty-free withdrawals from retirement plans for any “qualified birth or adoption distributions.” Normally, there is an additional 10 percent tax penalty on distributions that do not meet certain requirements. This penalty does not apply to distributions for a qualified birth or adoption if that distribution does not exceed $5,000 for each birth or adoption. A qualified birth or adoption distribution is any distribution from a plan to an individual within one year of the date of the birth or date of the legal adoption. An eligible adoptee is defined as an individual (other than the child of the taxpayer’s spouse) who is not yet 18 years old or is physically or mentally incapable of self-support. Also, the individual is allowed to repay any qualified birth or adoption distribution. However, the details will need to be worked out in regulations. Note: You will still have to pay income taxes on the money you take from your retirement account. Depending on how that leaves your taxable income amount at the end of the year, you may want to reconsider. Ask your CPA how this strategy would affect the bottom line tax costs all things considered before you decide. Thank you! Whether you are reading this for yourself, a family member, or friend, thank you for your interest in helping make it easier to adopt a child! More to Come … George Wells Ps. As always, when you have specific questions or need specific application insights, drop us a line. Life is too short to not – Retire Happily! Read this article on our website: https://retirehappily.net/newchild/ Contact Us: https://retirehappily.net/15-minute-phone-call-with-a-financial-advisor/

How to Get Your Money! Working Savers get more Privileges in Retirement Savings Accounts. Good News, you have more options! Why is this important? This group of changes is intended to make it easier for savers to control tax costs, save money, and use what they have expanded for good. Want the Secure Act explained as simply as possible? Get the Secure Act Roadmap: https://retirehappily.me/secure-act The SECURE Act signed December 19th, 2019, is the law for 2020 and beyond. Start Saving for Retirement While in College 1. Section 105. Treat Certain Taxable Non-Tuition Fellowship and Stipend Payments as Compensation for IRA Purposes Stipends and non-tuition fellowship payments received by graduate and postdoctoral students are not treated as compensation and cannot be used as the basis for IRA contributions. The legislation removes this obstacle to retirement savings by taking such amounts that are includible in income into account for IRA contribution purposes. The change will enable these students to begin saving for retirement and accumulate tax-favored retirement savings. This is great news to benefit from the long term effects of compound interest. It may not seem like a lot in a student’s budget, but the early seeds are the ones that produce the most fruit. And it is rewarding to have some skin in the game early. Part-Timers Get to Contribute to Retirement 2. Section 111. Allowing Long-term Part-time Workers to Participate in 401(k) Plans Under current law, employers generally may exclude part-time employees (employees who work less than 1,000 hours per year) when providing a defined contribution plan to their employees. As women are more likely than men to work part-time, these rules can be quite harmful to women in preparing for retirement. Except in the case of collectively bargained plans, the bill will require employers maintaining a 401(k) plan to have a dual eligibility requirement under which an employee must complete either a one year of service requirement (with the 1,000-hour rule) or three consecutive years of service where the employee completes at least 500 hours of service. In the case of employees who are eligible solely by reason of the latter new rule, the employer may elect to exclude such employees from testing under the nondiscrimination and coverage rules, and from the application of the top-heavy rules. This is another great benefit for everyone to take control of tax costs and sow seeds for the future. If you are a lower earner, you should consider putting this into a Roth IRA or partially converting your IRA to a Roth IRA. Get $5,000 for Adoptions 3. Section 112. Penalty-free Withdrawals from Retirement Plans for Individuals in The legislation provides for penalty-free withdrawals from retirement plans for any “qualified birth or adoption distributions.” Normally, there is an additional 10 percent tax penalty on distributions that do not meet certain requirements. This penalty does not apply to distributions for a qualified birth or adoption if that distribution does not exceed $5,000 for each birth or adoption. A qualified birth or adoption distribution is any distribution from a plan to an individual within one year of the date of the birth or date of the legal adoption. An eligible adoptee is defined as an individual (other than the child of the taxpayer’s spouse) who is not yet 18 years old or is physically or mentally incapable of self-support. Also, the individual is allowed to repay any qualified birth or adoption distribution. However, the details will need to be worked out in regulations. Note; You will still have to pay income taxes on the money you take from your retirement account. And depending on how that leaves your taxable income amount at the end of the year, you may want to reconsider. Ask your CPA how this strategy would affect the bottom line tax costs all things considered before you decide. Protect Older Workers 4. Section 205. Modification of Nondiscrimination Rules to Protect Older, Longer Service Participation The legislation modifies the nondiscrimination rules with respect to closed plans to permit existing participants to continue to accrue benefits. The modification will protect the benefits for older, longer- service employees as they near retirement. This intends to continue the much-needed protection of All Workers. Read this article on our website: https://retirehappily.net/how-to-get-your-money-from-secure-act-part-4-of-4/ Are you missing something in your retirement plan? HINT: You DON’T want to find out when it’s too late You will know where to look to be sure you’re doing retirement right after watching these three videos. Get Free Access: https://retirehappily.net/5-minute-retirement-makeover/

The SECURE Act signed December 19th, 2019, is the law. Pay attention to the retirement income numbers, Ask these questions to keep yourself out of trouble. Show Me the Money! Working Savers get more Privileges in Retirement Savings Accounts. Want the Secure Act explained as simply as possible? Get the Secure Act Roadmap: https://retirehappily.me/secure-act Good News, you have more options! This group of changes is intended to make it easier for smaller employers to give retirement savings programs, and make it easier for those nearing retirement to know what they can count on as income from their savings. Why is this important? The intention of the provisions below is to make it easier and more clear for all to have a retirement plan, and know what that translates into for predictable income in retirement. Our concern is a false sense of security from all the information presented. The SECURE Act signed December 19th, 2019, is the law for 2020 and beyond. 1. What you need to know- Any chance you get, roll your company savings plan to your IRA. Pay attention to the retirement income numbers, AND ask these questions to keep yourself out of trouble. Important Retirement Questions: Exit Strategy, Control, & Adapt / Adjust: https://retirehappily.net/important-retirement-questions/ 2. How it may or may not affect you- This should make it easier for you to have more information and hopefully, confidence in your retirement plan. 3. What to ask your CPA, Attorney, or Financial Professional- The biggest challenge on this topic is being certain you’re getting insights from someone who knows the specifics of this particular topic. Unfortunately, well-meaning professionals are influencing savers just trying to be helpful but giving incomplete or bad information on complicated scenarios they think they know. Ask these questions to get a better idea of who you are talking to and if their area of expertise is likely to fit your changing needs. 7 Basic Questions You Should Ask Every Financial Advisor You Meet: https://retirehappily.net/7-basic-questions-you-should-ask/ 4. How to know if you are doing it right- Keep asking questions of someone you are comfortable is looking at the big picture AND all the little details of your plan. Rest assured, as we further evaluate this new piece of retirement legislation, we will continue to give you insights on what you need to know to not miss out on the opportunities that you may benefit from going forward. More to Come … George Wells Read this article on our website: https://retirehappily.net/show-me-the-money-from-secure-act-part-3-of-4/ Ps. As always, when you have specific questions or need specific application insights, drop us a line. Life is too short to not – Retire Happily! Are you missing something in your retirement plan? HINT: You DON’T want to find out when it’s too late You will know where to look to be sure you’re doing retirement right after watching these three videos. Get Free Access: https://retirehappily.net/5-minute-retirement-makeover/

Do you wonder what your flying experience would be during these times amid many new reopenings? I recently took a flight, and I made a video sharing my experience. If you are thinking about traveling on a plane, you should watch this. And, if you want to learn more about the COVID-19 ripple effect, you should watch this. If the airports are a glimpse of the future, we need to be prepared for the worst. Full-length video: https://retirehappily.net/airports-showing-signs-of-the-covid-19-economic-ripple-effect/

New Rule for 72nd Birthday – SECURE Act - RMDs can Wait And you can keep contributing … Even Part-Time. Good News, you can grow your retirement longer! Want the Secure Act explained as simple as possible? Get the Secure Act Roadmap: https://retirehappily.me/secure-act Reference TITLE IV: Revenue Provisions, Section 401 of the SECURE Act signed December 20th, 2019 Why is this important? We get some reprieve in taking money out of our retirement accounts, and if still working (even only part-time), we can still contribute longer. 1. Required Minimum Distribution (RMD) Age raised to 72 Section 113. Increase in Age for Required Beginning Date for Mandatory Distributions Under current law, participants are generally required to begin taking distributions from their retirement plan at age 70 ½ . The policy behind this rule is to ensure that individuals spend their retirement savings during their lifetime and not use their retirement plans for estate planning purposes to transfer wealth to beneficiaries. However, the age of 70 ½ was first applied in the retirement plan context in the early 1960s and has never been adjusted to take into account increases in life expectancy. The bill increases the required minimum distribution age from 70 ½ to 72. Good News!, you can wait nearly two more years to start taking the mandatory distributions from your IRA accounts, and if it is money you don’t need, you have two more years to do a partial Roth conversion to control your income tax cost. The 70½ rule began in the 1960s when life expectancy was shorter. This is likely the beginning of cascading changes coming in the near future as you will see in the Bonus Tip below. 2. Elimination of the 70 ½ Age Limit for Contributions Section 106. Repeal of Maximum Age for Traditional IRA Contributions The legislation repeals the prohibition on contributions to a traditional IRA by an individual who has attained age 70 ½ . As Americans live longer, an increasing number continues employment beyond the traditional retirement age. This typically isn’t as big of a deal unless you are still working past 70 ½ . If you are working even part-time past 70 ½ you should still be able to contribute retirement savings account. If you plan to work beyond 70 ½ either by choice or necessity. 3. Part-Timers get to participate Section 111. Allowing Long-term Part-time Workers to Participate in 401(k) Plans Under current law, employers generally may exclude part-time employees (employees who work less than 1,000 hours per year) when providing a defined contribution plan to their employees. As women are more likely than men to work part-time, these rules can be quite harmful for women in preparing for retirement. Except in the case of collectively bargained plans, the bill will require employers maintaining a 401(k) plan to have a dual eligibility requirement under which an employee must complete either a one year of service requirement (with the 1,000-hour rule) or three consecutive years of service where the employee completes at least 500 hours of service. In the case of employees who are eligible solely by reason of the latter new rule, the employer may elect to exclude such employees from testing under the nondiscrimination and coverage rules, and from the application of the top-heavy rules. This is a big deal for everyone. This opportunity nearly eliminates excuses for not squirreling away some of your income for the future. As Promised … What you need to know We have a little more freedom in our required distributions and our opportunities to save while working. How it may or may not affect you This can be a great opportunity to save money on income taxes and add another level of income tax cost control. What to ask your CPA, Attorney, or Financial Professional Should you be putting more in your retirement accounts? Should you be considering more converting more of your IRA to Roth to ease the tax burden? How to know if you are doing it right. Keep asking questions of someone you are comfortable is looking at the big picture AND all the little details of your plan. More to Come … George Wells Ps. As always, when you have specific questions or need specific application insights, drop us a line. Life is too short to not – Retire Happily! Next: Show Me the Money! – from SECURE Act – part 3 of 4 https://retirehappily.net/show-me-the-money-from-secure-act-part-3-of-4/ Read this article on our website: https://retirehappily.net/rule-for-72nd-birthday-secure-act-part-2-of-4/

Is the stretch IRA dead? The era of stretch IRA as we knew it is over. Good News, you still get a choice in When to Pay Tax! The Stretch IRA is known by a few other terms you may be more familiar with though. When I say Stretch IRA, I am talking about the beneficiary IRA or inherited IRA. Want the Secure Act explained as simply as possible? Get the Secure Act Roadmap: https://retirehappily.me/secure-act Secure Act 2019/2020 overview details explained. The SECURE Act signed December 20th, 2019, is the law for 2020 and beyond. Savers are already investigating changes, especially those with large IRAs who had planned on a lifetime tax deferral for their heirs. We are receiving many questions on exactly how and when this major change will affect those who have saved. TITLE IV: Revenue Provisions, Section 401. The SECURE Act ends the stretch IRA. All of those plans have to be reviewed and probably revised. Under the now “old rules” (before 2020), an individual designated beneficiary could extend post-death “stretch IRA” required minimum distributions over his lifetime. A young grandchild might have a 70-year payout period. But not anymore. Why is this important? The SECURE Act eliminates the stretch IRA and replaces it with a 10-year payout deadline for most beneficiaries. The clients most affected are those with the largest IRAs who had planned on leaving the lion’s share of those accounts to extend over the lives of their children and grandchildren. This especially includes any clients who named a trust as their IRA beneficiary. These trusts will not work well under the new rules. These estate plans need to be readdressed immediately. 1- Are the current stretch IRAs for those who died before 2020 still good? Yes, they are grandfathered. 2- Does this kill stretch IRAs for all beneficiaries? No. The law carves out exemptions for certain beneficiaries now called eligible designated beneficiaries, or EDBs. Eligible designated beneficiaries are: Surviving spouses. Minor children, up to majority – but not grandchildren. Disabled individuals – under the strict IRS rules. Chronically ill individuals. Individuals not more than 10 years younger than the IRA owner (generally, siblings around the same age). 3- Do grandchildren qualify as minors for the EDB exemption? No. The law is clear on this. The EDB exemption from the 10-year rule is only for the child of the IRA owner or the plan participant. 4- How do the RMDs work under the 10-year rule? Are there RMDs during the 10 years? No. Under the 10-year rule, there are no annual specified Required Minimum Distributions (RMDs) during the 10 years. Instead, the entire IRA balance must be emptied by the end of the 10 years. Beneficiaries can withdraw any amounts they wish over the 10 years, so beneficiaries do have some planning flexibility during the 10 years to withdraw funds when it best fits their tax situation during that time. Biggest Loser- Highest impact negative news about for IRA / Roth 5- Do Roth IRAs still qualify for the stretch? No. This is an unfortunate big deal for tax and estate planning. Until a few weeks ago, all money in a Roth IRA was able to grow tax-free for the lifetime of the saver AND the lifetime of each beneficiary of the Roth. Now, inherited Roth IRAs are subject to the same 10-year payout rule, except that the distributions will generally be tax-free. Savers will want to consider doing more Roth conversions to eliminate what could be a big tax bill within 10 years after death. George Wells Retire Happily! https://retirehappily.net/ Contact us: https://retirehappily.net/15-minute-phone-call-with-a-financial-advisor/ All insights- Part 1: Stretch Affect from SECURE Act – https://retirehappily.net/stretch-affect-from-secure-act-part-1-of-4/ Part 2: Rule for 72nd Birthday – SECURE Act - https://retirehappily.net/rule-for-72nd-birthday-secure-act-part-2-of-4/ Part 3: Show Me the Money! – from SECURE Act - https://retirehappily.net/show-me-the-money-from-secure-act-part-3-of-4/ Part 4: How to Get Your Money! – from SECURE Act - https://retirehappily.net/how-to-get-your-money-from-secure-act-part-4-of-4/