The CARES Act (2019) and the SECURE Act (2020) bring new planning opportunities.
Below is a list of key changes:
Retirement Plan Withdrawals and Loans
- Up to $100,000 may be withdrawn from qualified retirement accounts - IRA, 401(k) and 403(b), without early withdrawal penalty for Covid related purposes
- Taxes due can be paid over 3 years
- The distribution can be paid back within the 3 year period which will negate the tax on the distribution.
- $300 charitable deduction for those who do not itemize
- For those who itemize deductions, charitable deduction limit is increased up to 100% of Adjusted Gross Income (Does not apply to “Donor Advised Funds”)
- For those over 70 ½ you can still send donations directly from your IRA up to $100,000
Required Minimum Distributions
- No RMD required for 2020
- RMD age increased to 72 years old
- Consider a Roth Conversion of your normal RMD amount
Stretch IRA No Longer Allowed
- Beneficiaries who inherit an IRA must withdraw the funds over a 10 year period, versus over their life expectancy under the old law.
Planning Opportunities related to “Loss of Stretch IRA”
- Roth conversion for those who have beneficiaries in a higher tax bracket than the IRA owner
- Charitable contributions made directly from IRA to the charity for those over 70 ½ of up to $100,000
Please call or email me if you would like to meet to discuss your specific situation.