On December 20th, 2019, new legislation was signed into law as part of a larger government spending package that promises to have wide ranging and lasting effect on saving for retirement. Called the Setting Every Community Up for Retirement Enhancement (SECURE) Act, the legislation includes many long-sought common-sense reforms that could make retirement saving both easier and more attainable for many Americans.
Most provisions in the law already went into effect on January 1st, 2020. The most notable policy changes will alter rules around defined contribution plans (like 401(k)s), defined benefit pension plans, individual retirement accounts (IRAs), and 529 college savings accounts.
Though the particulars of the law are wide-ranging and can be intricate, some of the key takeaways of the bill include:
Extending the current required minimum distribution requirements to age 72
Allowing parents to withdraw up to $10,000 from 529 plans to repay student loans
Providing protection to unrelated employers to join a pooled employer plan
Giving business owners more flexibility to help guide their decision-making
Allowing long-term, part-time workers to participate in 401(k) plans
Modifying the nondiscrimination rules to protect longer-service participants
Increasing the small employer pension plan startup tax credit up to $5,000
Simplifying the 401(k) safe harbor rules
Allowing plans adopted by the filing due date to be treated as in effect as of the close of the year
Requiring disclosures regarding lifetime income
Expanding portability of lifetime income options
Providing a fiduciary safe harbor for selection of a lifetime income provider
Modifying the treatment of custodial accounts on termination of 403(b) plans
If you have any thoughts or questions on how your retirement savings plans might be affected or wish to take a deeper dive into the particulars, we’d love to discuss the details and possibilities. Such changes in the tax code represent a good time to revisit and reassess your financial circumstances and long-term strategies.
According to recent statistics, there are now more than 44 million unique borrowers who collectively owe $1.6 trillion in student loan debt—making student loans the second largest consumer debt category after mortgages. Those are staggering numbers.
For the considerable Millennials and massive Gen Z workforce to follow, student loan debt is a primary economic concern, often before mortgages and retirement savings can even be considered. Smart businesses have taken notice in a growing trend toward creating student loan repayment assistance programs as a necessary company benefit to attract and retain younger talent.
As 2019 closes and a new year starts with a fair amount of uncertainty, it is a good idea to take stock of your financial situation. While markets have been going strong and the economy seems largely sound, upheaval in both domestic and world politics, an increasingly fragile interaction with the environment, and uncertainty in global trade policies will continue throughout the immediate future. We’d like to ask all of our clients, both individual and as part of an organization—how is your money working for you and do you have a cohesive plan to maintain and grow your wealth?
There is growing interest in a design strategy known as the Mega Backdoor Roth Conversion (the Conversion). The Conversion allows 401(k) or 403(b) Plan participants who are already deferring the maximum allowed to contribute After-Tax funds to the plan. The participant may then convert the money from After-Tax funds to Designated Roth funds. This two-step process has the effect of allowing plan participants to contribute additional Roth money to the plan and shelter the gains from taxes.
Whether your 65th birthday is fast approaching or decades away, it pays to understand the basics of how Medicare works and what it does and does not cover—and then plan accordingly for any additional coverage that you may need in retirement.
Enrolling in Medicare can be more complicated and frustrating than many might expect, and the rules and regulations are changing.
Aviva Sapers, President and CEO of Sapers & Wallack, and Peter Stoner, President and CEO of Stoner & Company, answer questions about our October blog ‘Medicare Coverage: What to expect, how to enroll, and will you need supplemental plans for retirement’.
For most Americans in 2019, the idea of retirement is associated more with a sense of anxiety than the promise of relaxation it once inspired. Have I saved enough? When should I stop working? Will I have a guaranteed source of income? And more than ever before, how can I plan for the rising costs of healthcare?
These are all valid questions that need answers, but the stressors around future medical expenses and the cost of insurance coverage, in particular, have never been more pressing.
We are living longer, healthcare costs are rising faster than general inflation, government coverage and subsidies are less, and we won’t have the same employer and union-based benefits that our parents’ generation enjoyed. According to a 2019 Fidelity Benefits Consulting estimate, the average cost for healthcare after the age 65 will be $285,000 per couple.[i] But our own internal estimates find that the costs will likely be much higher, and possibly even double, depending on your income levels in determining Medicare coverage.