sues are uncomfortable to discuss
uring an already expensive time,
ot only give you peace of mind but
uring your family’s financial future.
YOUR FINANCES
SPONSORED CONTENT
The SECURE Act
eady an (almost illogically) expen-
ver, is not slowing Death
the majority of of the
easing tuition year after year. If it’s
p cover some or all of
these costs,
Stretch
IRA
in diapers. The earlier, the better.
you’ve reached retirement, you’re no longer relying on wages
an and set up an automatic month-
to sustain your family’s lifestyle. From that mindset, term
ount that fits into your cash flow.
life was
insurance
is truly the
most
effective
(and
way
after a few months.
let
the legislation
There
are a few
exceptions
to the cheapest!)
10-year rule. Most
t the end Also,
of 2019,
historic
passed,
notably spouses, disabled beneficiaries, and
retirement
go.
just may want to marking
lend a a significant
hand. shift in the to
A
individuals who are less than 10 years younger than
landscape. This bill is known as the SECURE Act –
the IRA owner. Note that this rule also applies to
an acronym for the effortlessly memorable Setting
retirement
plans to
(401k,
403b, SIMPLE If
IRA, you’re
SEP IRA) not
Every Community Up for Retirement Enhancement
So how Act.
do you know how
much
purchase?
and Roth IRAs. on your existing portfolio,
Within the new law are a few meaningful running
changes that a
may thorough analysis
and they will
differ
from company
impact
your retirement
planning, generational planning,
anticipated growth,
and future
cash
flow, a (RMD)
good rule of
REQUIRED
MINIMUM
DISTRIBUTION
tax planning
approach.
highlight and
one
in particular—the
AGE Have
RAISED a TO qualified
72
thumb is 10x salary.
adviser go out to bid
Spending Account. This account
Prior
to
2020,
IRA
owners
were
generally required to start
ELIMINATION
OF THE in
STRETCH
insurance company that
will provide that
aside income
before taxes
order IRA to find a reputable taking
distributions
the
year
in
which
they turned 70½. The
Prior to 2020, an IRA beneficiary could spread
coverage at the most
cost-effective
rate.
If any you’re
not
SECURE
Act
has
adjusted
that
to
72
for
individual
who in
f childcare. distributions
Depending
on
your
tax
over their lifetime. By spreading the
did
not
attain
70½
by
the
end
of
2019.
good
distributions, or stretching, the beneficiary
could health, if you smoke, or have a family history of heart
e you 20 to 30% on what you elect
take advantage of continued and long-term
tax-
disease,
deferred growth.
for instance, the low-cost alternative may be to
MAXIMUM AGE FOR IRA CONTRIBUTIONS
obtain that level of REMOVED
coverage
through your employer. They
Before 2020, you were prohibited from contributing
will likely offer guaranteed
coverage
at age.
group
rates
up to
to an IRA after
attaining RMD
That has
since for
been
Hypothetical Scenario
repealed. Although there aren’t many individuals
A 44-year old inherited her parent’s some
IRA in multiple of salary.
ce is to cover a 2018
period
of $200,000.
time Using
in the life expectancy
working into their 70s, for those that do, there are new
valued at
opportunities to explore.
tables, she This
had the
opportunity to stretch her
ancially vulnerable.
window
required
distributions
over
the
next
40
years.
In
Continued.
during your working years. Once
the first year, she was required to take $5,000 – or
1/40th. Assuming a constant balance, in the second
year, she was required to take $5,128 – or 1/39th. In
the third year, she was required to take $5,263 – or
1/38th and so on.
Starting in 2020, however, a beneficiary
must liquidate the inherited IRA
within 10 years.
Assuming the account owner passed away in 2020,
that same beneficiary must now decide how much and
how often to take distributions over the next 10 years. Do
you distribute the entire amount in the final year, spread
evenly each year, or something in between? As a 44-year-
old, in potentially her highest-earning (and taxable) years,
that may be a difficult decision to make without proper
planning.
Reach out to a CERTIFIED FINANCIAL PLANNER™ to
better understand the SECURE Act and how the sweeping
changes may impact your future financial planning.
This Industry Insight was written by Matthew D.
Kelly, CFP®.
As an advisor with Allegheny Financial Group, Matt
helps guide individuals and families toward achieving
their distinctive financial goals. Matt and his wife,
Mia, live in Mt. Lebanon with their two kids and are
enjoying family life in such a friendly community.
For a better understanding of how Matt
could work with you and your family,
please call him at 412.536.8076 or email at
[email protected].
Allegheny Financial Group is a Registered Investment Advisor. Securities offered
through Allegheny Investments, LTD, a registered Broker/Dealer. Member FINRA/
SIPC.
MT. LEBANON
❘
SPRING 2020
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