Jim Niedelman:
Time now for this week’s 4 Your Money. James Nelson, financial advisor with NelsonCorp Wealth Management here. Great to see you again.
James Nelson:
Good to see you too, Jim.
Jim Niedelman:
So you brought up something with us over the summer about new legislation that impacts American retirement plans. Some things weren’t necessarily clear at the time. How much clearer are things now?
James Nelson:
Yeah, so it’s the Secure Act this July. We talked about this a lot. It’s new legislation that’s being brought forward, now law, it had a lot of steam in the summertime. Kind of hit a low in the fall. We didn’t know if it was going to pass. Sure enough, it’s passed here by the end of the year and it’s going to impact everybody. Anybody with a retirement plan money, whether that’s IRA, 403B, 401K. Everybody needs to be aware of the changes that are coming down the line.
Jim Niedelman:
So you did indicate a few changes with this law. What are the most important ones people watching at home right now should know?
James Nelson:
Yeah, and I think we’ve got a graph here that’ll illustrate a few of these changes. The big ones are right here. The IRA contribution over age 70 and a half. If you had a traditional IRA under previous law, you could not contribute to a traditional IRA once you attain 70 and a half. There are some people that are that are still working after that age, so it’s nice that they can now contribute. Another big one is increased age for your required minimum distribution. Again, previous law, 2019, when you hit age 70 and a half, you have to start taking those distributions from an IRA. That’s been bumped back to age 72 whilst for a little bit more tax deferred growth if people aren’t needing the money. The stretch IRA, probably the most controversy centers around that.
James Nelson:
That bullet point right there, that’s if you inherited an IRA, Jim, under current law you could stretch that over a 20, 30, 40 year time period. That’s being eliminated and now it has to be liquidated over a 10 year period of time. Certainly there’s some beneficiaries that don’t have any problem liquidating that over that 10 year period of time, but for some people that want to use that money down the line, it’s a big change.
James Nelson:
And then improvement as far as accessing retirement plans for small businesses, you can now group retirement plans with other small businesses. Makes it easier for employers to offer those plans.
Jim Niedelman:
Make things more effective for those companies as well.
James Nelson:
Absolutely.
Jim Niedelman:
What should people do to respond to these changes?
James Nelson:
I think the big thing is working with competent and current financial advisors, tax professionals and whatnot. I mean we talked to a lot of advisors, a lot of CPAs, accountants, that aren’t even aware of the Secure Act and it’s already law. So working with those individuals who are current and up to date on all these new changes really provides a better outcome for for people.
Jim Niedelman:
Always good to do your research on these sorts of things, for sure. James Nelson with NelsonCorp Wealth Management. Thanks for your time this morning.
James Nelson:
Thanks Jim.
Jim Niedelman:
And we’ve got more of this discussion for you online at OurQuadCities.com.