Published Thursday, December 26, 2019 at: 7:00 AM EST
We've warned about the SECURE Act's effects on retirement income planning in previous articles over the past nine months, and this is a final call to action. If you're in any of the following four retirement income planning situations, you have one last chance to reduce your tax bill by acting before January 1st, 2020:
1. You live in a state with a high income-tax rate and own a traditional IRA worth a sizable amount, say $500,000 or more.
2. You own a traditional IRA that can be converted to a Roth IRA to reduce your 2019 tax bracket.
3. You previously had set up a stretch-IRA conduit trust for the beneficiaries.
4. You suffered the loss of a spouse within the past nine months and inherited their IRA.
You Heard It Here First
Starting in March 2019, we warned of this sweeping new tax law drastically changing retirement income planning by the end of the year. It finally happened! Meeting our lowest expectations, the enactment of the law was delayed repeatedly by events in Washington. After months of no action, the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 hastily was approved by both houses of Congress and, on December 20th, signed into law by President Donald J. Trump.
Only two weeks earlier, the SECURE Act had seemed unlikely to be enacted in 2019, and then it happened in a flash. As usual, Washington showed no consideration for the year-end havoc the SECURE Act would wreak on taxpayers, as well as tax, legal and financial professionals, whose holidays were ruined because of the rapidly-closing window of last-minute tax-saving opportunities.
Four Retiree Situations Requiring Urgent Action
If one of the four profiles bulleted above applies to you, or if you'd like us to send you our previous SECURE Act tax planning reports, please email or call us. Receive updates on 2020 retirement income tax planning opportunities under the SECURE Act by subscribing to our research reports.
The SECURE Act received bipartisan support and the President's signature, despite the politically charged atmosphere in Washington, D.C., because it is a practical modernizing of outdated aspects of the tax laws affecting retirement income. It affects 401(k) plan sponsors as well as retirees, and those nearing retirement. The law will enable the sales of new retirement income products backed by insurance companies and other major changes affecting retirement success, and we will be monitoring these developments and expect to have multiple updates in 2020 on SECURE Act tax planning.
This article was written by a veteran financial journalist. While these are sources we believe to be reliable, the information is not intended to be used as financial or tax advice without consulting a professional about your personal situation. Tax laws are subject to change. Indices are unmanaged and not available for direct investment. Investments with higher return potential carry greater risk for loss. No one can predict the future of the stock market or any investment, and past performance is never a guarantee of your future results.
This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.
Financial planning provided by Williams Advisory Services, LLC, a Registered Investment Adviser.
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