Page 22 - Leisure Living Magazine August 2019

22 |LeisureLiving August 2019
www.LeisureLivingMagazine.com
The SECURE Act
And Your IRA
By Christopher McIntire, President, McIntire Retirement Services www.mcintireretirementservices.com
Good Summer to all of you that have enjoyed the wetness and heat that has been the Summer of 2019 around the North Coast of Lake Erie!
Most of you have probably not heard of the Setting Up Every Community for Retirement Act (SECURE Act from here on out), but you soon may be impacted by it. This legislation is mov- ing through Congress as I type and has already passed the House of Representatives by a vote of 417-3. Can you believe a bipartisan piece of legislation passing in this way given the current environment in Washington? It is unclear if the Senate will take it up prior to going on their sum- mer recess in early August.
I’ll comment on the two biggest pieces here for the readers getting near or already in their re- tirement. First is the possible change in Required Minimum Distributions (RMD’s). This is the amount of money you are required to take from your IRA’s, 401k’s, 403b’s and other types of qual- ified retirement plans. Roth IRA’s do not have RMD’s. The legislation would move the RMD’s to age 72 from 70 1⁄2, not a real game changer by any means and the details need to be finalized if they will change the RMD amount and who will be affected by this (for what dates of birth does it start moving to 72).
The more important piece is when you pass away and your IRA follows the beneficiary des- ignations beyond spouses (non-spousal benefi-
ciaries to be technical) to kids, grandkids, friends and so forth. Currently, a non-spousal beneficia- ry can take distributions over their remaining life expectancy, allowing an IRA to be “stretched’ for many decades potentially. Let’s say you have 30-year-old son or grandson listed as the benefi- ciary, today, they would have 53.3 years to draw out of the IRA and keep it invested and tax de- ferred. What I mean is the year after the death of the IRA owner, the son would divide the IRA total by 53.3 for the first year, 52.3 for the second year and so on. So, a $500,000 Inherited IRA would only be required to pay the beneficiary $9380.86 the year after the IRA owner passed away. A great way to transfer some wealth as many people’s largest holdings are in the IRA type accounts.
Unfortunately, the SECURE Act would re- quire that same beneficiary to empty the IRA account within ten years of the owner’s death. Thereby foregoing many years of potential tax deferral. This is taxed like ordinary income and added to your wages for purposes of paying taxes each year. This type of income may change ben- efits, like student loan eligibility and other bene- fits that are governed by adjustable gross income (AGI) or modified AGI (after deductions and so on). The law of unintended consequences you could say...
Remember all those articles where I spoke about tax free Roth IRA’s and life insurance? If not, this may be a good time to investigate this as a potential long-term solution to pass on your accumulated wealth. I’ll keep you posted as this legislation moves forward later this year.
Investment advisory services offered through Brookstone Capital Management, LLC. (BCM), a Registered Investment Advisor. BCM and McIntire Retirement Services are independent of each other. Insurance services also offered by representatives of McIntire Retirement Services. Insurance services are offered by representatives of McIntire Retire- ment Services.
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