At the end of 2019, Congress passed the most sweeping change to retirement rules in over a decade.

Known as the Setting Every Community Up for Retirement Enhancement Act (SECURE Act), this legislation went into effect on January 1, 2020, and impacts retirement and estate planning rules.

Here are a few of the biggest takeaways from the Act:

RMDs Now Start at Age 72

The new rules delay the age at which you must begin taking Required Minimum Distributions (RMDs) from your Traditional IRA.

If you are already taking RMDs, continue taking them. The new rules don’t affect you. If you were born between January 1 and June 30, 1949, you’re subject to the old rules and must take your first RMD before the end of 2020. But, if you were born on July 1, 1949, or later, you can delay beginning distributions until you turn 72.

You Can Contribute to a Traditional IRA After Age 70½

If you are earning income, you can continue making contributions to your Traditional IRA after you retire. This change is great news for anyone who wants to continue working and growing their retirement savings. Since there’s no age cap on Roth IRA contributions, there’s no change there.

“Stretch” IRAs Are Gone For Most People

If you inherit an IRA after January 1, 2020, you won’t be able to “stretch” distributions over your own lifetime, unless you qualify for certain exemptions, including for spouses, minor children, chronically ill or disabled beneficiaries, etc.

Under the new rules, most beneficiaries of an inherited IRA will have to withdraw the full account balance and pay taxes on the distributions within 10 years. Fortunately, if you inherited one already, you’re grandfathered in under the old rules.

Your 401(k) Might Start Including Annuities

The new rules pave the way for employers to start offering annuities within 401(k) plans by adding additional “safe harbor” protection for employers. While annuities can add options for employees seeking retirement income, they require research and cost-benefit analysis before incorporating them into retirement strategies. We strongly recommend seeking advice before purchasing one within your 401(k).

401(k) Plans Become More Accessible to Businesses and Employees

Many small businesses have found it expensive and cumbersome to provide 401(k) plans to their employees. The new rules make it simpler and safer for small employers to team up to offer “multi-employer” plans. Starting in 2021, employers who provide 401(k) accounts to full-time employees will be required to offer access to qualifying part-time employees.

New Parents Can Take Out Penalty-Free Distributions For Births and Adoptions

Parents can now withdraw up to $5,000 (or $10,000 if married) from their qualifying retirement accounts without paying the early withdrawal penalty if done within one year of the birth or adoption date (income taxes still apply).

This rule has some important details to get right and taking early withdrawals from your retirement account can reduce your retirement savings later. We recommend asking for advice on the best way to cover birth or adoption costs before taking advantage of the new rule.

…Plus Some Miscellaneous Tax Fixes

Kids’ unearned income is now taxed at the parents’ top marginal tax bracket (instead of the much higher trust tax bracket).

The medical expense deduction threshold is back at 7.5% of Adjusted Gross Income for 2019 and 2020.

529 college savings plans can now be used for apprenticeships and up to $10,000 of student loan repayments.

The deduction for up to $4,000 in qualified tuition and fees is now available again.

Bottom Line: Rules Change, but the Fundamentals of Planning Don’t

The SECURE Act represents a massive change to retirement planning rules. We strongly encourage you to reach out and schedule a review of your current strategies to help ensure you’re taking full advantage of the new opportunities as well as avoiding the pitfalls the new rules create.

In the meantime, if you have any questions, please give the office a call at 470-839-9001.

Till Next Time,

Kurt Arseneau

DIRECT: 470-839-9005 • EMAIL: kurt@arseneauadvisory.com • WEB: www.ArseneauAdvisory.com

Disclaimer: Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Arseneau Advisory Group are not affiliated companies. Arseneau Advisory Group is not a CPA but provides tax services through it’s sister company Vickery Tax and Accounting, LLC.

The holiday season can be a joyful, magical time for the kids and older folks alike.  While there are so many reason s to love the holidays, there are also plenty of reasons to be careful during them.  Why?  Because the holidays can be a season of poor financial choices.  That’s according to the researchers.  In fact, one study found that 2 out of 3 people plan to make bad financial decisions during the holiday season.  That’s right, they plan to make poor decisions!  They are taking money out of savings, racking up credit card debt, and simply spending more than they can afford.  Having a plan is the most important thing during the holidays.

“A goal without a plan is just a wish.”  These famous words by author, pilot, and war hero Antoine de Saint-Exupery ring true in many aspects of life – including the holiday season.

In fact, one of the best ways to manage holiday stress is to make a plan for everything you need to do – and then stick to the plan.  A good plan can keep you on track to enjoy a wonderful holiday season.  Planning your schedule and your “To Do” list is just one way to plan for a more enjoyable holiday season.

It’s also a good idea to make a plan for what you’ll do when you face holiday stress triggers.  Finding the perfect holiday gifts can be a major stressor.  Usually, that stress doesn’t come from the time or money spent searching for the perfect gift.  Instead, gift giving anxiety mostly comes from trying to find the ideal gift to send the right message and provide enough meaning.  One way to avoid holiday gift stress is to focus on giving an experience that has lasting value.  In fact, research shows that experiences make people happier than possessions.

If you are struggling to figure out what to give your loves ones, consider things they have always wanted to do or things you can do with them.  The gift of an experience can create lasting happiness and memories that a cherished for a lifetime.

With a plan, some boundaries, and the right priorities, you can invest your time and money into things that give you joy during the holidays.  And that can mean a far better outlook as you enter the New Year.

As a financial adviser, I’ve seen how the holidays pressure takes focus away from what really matters and causes financial and mental stress.  And I’ve helped many clients embrace the holiday spirit without going off track.  The truth is good financial health isn’t just about portfolios and investments – it’s also about good day to day behaviors, budgets, and thoughtful spending.

If you are stress about finances this holiday season, give some thought to the tips I gave about and give my office a call. I’d love to hear your holiday plans and help you create a personal financial strategy for the holiday season!

By Kurt Arseneau

DIRECT: 470-839-9005  •  EMAIL: kurt@arseneauadvisory.com  •  WEB: www.ArseneauAdvisory.com

Disclaimer: Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM).  AEWM and Arseneau Advisory Group are not affiliated companies.  Arseneau Advisory Group is not a CPA but provides tax services through it’s sister company Vickery Tax and Accounting, LLC.