The SECURE Act is a combination of legislation that affects retirement plans and planning in several ways. While it may not affect you today, life brings about changes that may require you to take another look at your financial plan.
We offer this seminar as a way to educate you about many things that may affect you, now or in the future. There also may be items that affect your children, grandchildren and even your small business that you need to be aware of.
Are Roth IRAs (and other Roth instruments) included in the SECURE Act changes to the Required Minimum Distribution (RMD) requirements?
No. Technically the Roth has no RMD requirements. Since the Roth is funded with after-tax money, there is no income tax on Roth distributions. Congress, through the SECURE Act, wants to ‘speed up’ when it receives the income tax on regular IRAs and other retirement accounts (more tax revenue now rather than stretching it out over longer lifetimes).
I understand that having a Roth IRA is a good planning tool and helps with some of the issues caused by the SECURE ACT. I have a traditional IRA. Can I change that to a Roth IRA and if so, how?
A Roth IRA or 401(k) is funded with after-tax money. You do not get a benefit of not paying taxes on the money contributed into a Roth. The benefit comes later. You do not pay any income tax on a Roth when you take the money out (as long as you do so after age 59 ½) and you do not pay any income tax on the growth in the Roth. The longer your money is in the Roth, the better the tax savings. You can convert a traditional IRA to a Roth but there are immediate tax consequences. Before you attempt this, you should talk to your Financial Advisor or your tax advisor.
I understand the benefits of converting to a Roth IRA. Do I have to do it all at once?
No, the conversion can be done over multiple years. There is no minimum or maximum requirements to convert, just the tax implications.
I do not understand all the talk about Trusts. Do I need a trust?
A trust helps you in directing how your estate is managed and distributed. If you have multiple beneficiaries or a variety of holdings in your estate (land, investment accounts, retirement accounts, even businesses), a trust is a good way to see your wishes carried out. The best thing to do is to review your needs with your advisor or lawyer, but the more complicated your estate is, the bigger the need may be for a trust.