We’re a little more than halfway through 2020 but there’s been enough news to keep us busy through the end of the year. With another round of relief potentially on the way, we thought it would be a great time to catch you up on all of the legislation that’s passed so far this year that impacts you financially.
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What You’ll Learn:
We’ve taken a lot of meetings and answered a wide range of questions this year, which is understandable considering how much has changed through the first seven months of 2020.
With the pandemic still ongoing, the relief measure will likely continue in some form before the year is over. But with so much already happening, we wanted to take time on the podcast to recap the year and help you catch up on everything that’s happened.
So, we’ll start this episode with the SECURE Act, which was finally passed late in 2019 after months of anticipation and officially took effect to begin this year. There are two key points we want to discuss on the show. First, it got rid of the Stretch IRA, which Joel feels is extremely important. Now, beneficiaries only have 10 years to withdraw all of the money out of an inherited IRA.
This is significant because beneficiaries could lose 30-40% of the value of an IRA if proper planning isn’t done. Ten years passes very quickly, especially if you don’t need the money when you first inherit it. By the time you look at it 7-8 years in, the value has increased and your heirs are left with a huge tax bill.
The other thing the SECURE Act does is change the RMD age. You now have an extra year and a half to continue saving before having to pull from those retirement accounts. This should be a good thing in most cases, especially if you’re someone that doesn’t need to withdraw money before that required age.
Next on the show is the legislation that’s come down since the pandemic began – the CARES Act. The first action that impacted individuals came in the form of a $1,200 stimulus check, which was scaled back based on income. That assistance was provided quickly and helped a lot of families.
The next move was eliminating RMDs. It allowed retirees from having to take money out if they didn’t have to, which was a great option to provide people. Also on the retirement account side, the government gave people the ability to pull money out of IRAs or 401k accounts without having to pay a penalty this year. That might not be the best option for you though so speak with a professional before deciding anything.
Although it’s been a very busy already, there appears to be more aid coming down with another stimulus package set to be signed off on once the details are finalized. This will provide another round of stimulus checks, more money for schools, unemployment help and more. We’ll be available to speak with anyone that wants to know how this new bill impacts them once everything has been passed.
[0:23] – Two key elements of the SECURE Act
[4:45] – Let’s use some real numbers to show how it works.
[8:28] – This will limit the ability to pass wealth between generations.
[9:48] – Change of the RMD age
[14:53] – Action taking during the pandemic
[15:19] – The recovery rebate
[17:12] – RMDs no longer required for 2020
Thanks for listening to this episode. We’ll be back again next week for another show.
“This penalizes savers in the sense that the more money you have in those IRAs or 401Ks, the more taxes are going to be paid by your heirs.”– Joel Johnson, Money Wisdom Podcast
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