The SECURE Act was recently signed into law by President Trump in December. The biggest change in the SECURE Act is the treatment of inherited retirement accounts. They must now be fully distributed (or emptied) by the end of the 10th year following the year of inheritance. There were many other changes in the SECURE Act as well, some small and some big.

Major changes in the SECURE Act

• Inherited IRAs must now be emptied by the end of the 10th year following the year of inheritance; previously, the distributions could be spread across the life of the beneficiary.
  • There are some exceptions (if you are an “Eligible Designated Beneficiary”); spouses, disabled, chronically ill, those who are not more than 10 years younger than the decedent, and minor children of the original owner (until they reach the age of majority) may be eligible for exceptions.
• The 70.5 begin date for Required Minimum Distributions (RMDs) is now 72.
  • This is a beneficial change for those who have not started taking RMDs yet; if you turned 70.5 last year and began taking them, you are grandfathered in and can’t go back to not taking RMDs. 

Minor changes in the SECURE Act

• You may qualify for a $5,000 penalty-free (but not tax-free) distribution for a qualified birth or adoption.
• Small businesses that are establishing a retirement plan (this does not apply to small businesses that already have a retirement plan) may qualify for a credit of $500 or $250 per employee, max of $5,000 tax credit.
• Businesses that adopt an auto-enroll provision for their qualified retirement plans may be eligible for a tax credit.
• There’s a provision in the SECURE Act that will make it easier and more economical for small businesses to offer retirement plans through pooled retirement plan providers. Formerly, Multiple Employers Plans (MEPs) were only for businesses with a prior relationship, like being owned by the same person. This provision in the SECURE Act gets rid of that restriction.
• Taxable amounts paid to students in graduate or postdoctoral studies will now count as compensation. This means that these students can now contribute funds received from fellowships, stipends, and more can now be contributed to an IRA.
• Money borrowed from employer-sponsored retirement plans can no longer be distributed through credit cards or similar vehicles without counting as a taxable distribution.
• The Tax Cuts and Jobs Act Kiddie Tax has been retroactively repealed to the former rate. A portion of a child or young adult’s income may have been taxed at the trusts and estates tax rate. Now things are back to the way they were, and amounts subject to the Kiddie Tax is taxed at the parent’s marginal federal income tax rate.
• 529 plan distributions can now be used for eligible apprenticeship costs (up to $10,000) and to make up to $10,000 in student loan payments.

The SECURE Act has many small positive changes (although most of them won’t affect many people) and one major negative change. The SECURE Act has been on our minds all week; if you’re thirsty for more SECURE Act content, we just did a full episode about all of the changes in the Act, how it will affect your retirement, and even a look at the numbers to see how much your beneficiaries could lose. Watch it now on YouTube below.

On December 20th, a big piece of legislation was passed called the SECURE Act. It will affect retirement, IRAs, taxes, and more! Don’t worry, in this episode, we break down everything you need to know about the SECURE Act and how your strategies may need to change. Plus, we make it fun!

In this episode, you’ll learn:

• How the SECURE Act stole money from your kids
• The positives and negatives of the new rules
• The best planning opportunities made possible by the SECURE Act
• Legal “loopholes” to help you make the most of your investments

Resources and research from this episode:

• U.S. retirement assets at $28 trillion in Q1, little changed from end of 2017 (Pensions & Investments)
• RMD Rules for Inherited IRAs (Fidelity)
• Department of the Treasury Internal Revenue Service (IRS)
• Financial Architects, LLC
• SECURE Act And Tax Extenders Creates Retirement Planning Opportunities And Challenges (Kitces)

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What’s the difference between a traditional (pre-tax) IRA and a Roth IRA? We have your answers in this week’s short episode of The Money Guy Show!

Before you click away thinking this is information you already know, stick around because we share advanced skills you won’t want to miss. We reinforce foundational financial advice you are likely familiar with and go one step further to help you maximize your knowledge so you can take action you didn’t know was possible.

What you’ll find out in this episode:

• What is the difference between a traditional IRA and Roth IRA
• Key characteristics of each type of account – what they have in common and where they start to deviate
• The greatest benefit of a Roth IRA
• What investors should know about tax-deferred vs tax-free growth
• What tax diversification is and how you can leverage it to grow wealth and meet your financial goals
• Advanced planning strategies to use
  • How to determine which account is right for you
  • What should be your deciding factor based on your income level
  • Ways to make contributions to a Roth IRA even if you are over the income limits
  • How to take an integrated approach with your various retirement accounts

Tune In and Go Beyond Common Sense with the Money Guys

This show would not be what it is today without the support of our wonderful listeners. We strive to continue making the show better and your feedback is an important part of that process.

If you have any questions/suggestions/comments/concerns (or just want to say hi!), feel free to reach out to us: brian@moneyguy.com and bo@moneyguy.com. You can also join the conversation on Facebook or connect on Twitter @MoneyGuyPodcast.

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If you have ever wondered how best to take your 401(k) assets with you when you switch employers, tune in to this week’s episode of The Money Guy Show.

In this week’s show, we not only cover how to take your retirement plan assets with you when you make a career move, but we also address ways to recover retirement plan assets you may have abandoned, and how to maximize the opportunities you have with your employer-sponsored 401(k) retirement plans.

Here’s what’s in store in this installment of The Money Guy Show:

• Understand the unique benefits of 401(k) plans
• The three things you can do with those previous employer retirement plans
• Ways to identify and recover abandoned retirement plan assets
• The steps you can take (proactively) if a job change is on the horizon 
• How to assess which option makes the most sense in your situation
• Perspective check! Tips on keeping your focus on your financial well-being and not falling into the comparison trap

Tune In and Go Beyond Common Sense with the Money Guys

This show would not be what it is today without the support of our wonderful listeners. We strive to continue making the show better, and your feedback is an important part of that process.

If you have any questions/suggestions/comments/concerns (or just want to say hi!), feel free to reach out to us: brian@moneyguy.com and bo@moneyguy.com. You can also join the conversation on Facebook or connect on Twitter @MoneyGuyPodcast.

If you enjoyed this episode, be sure to join our community! You’ll get immediate access to 15 of our most recent shows, plus you’ll get future podcasts delivered straight to your inbox so you can get in on the action right away.

Stick with us as we navigate the various types of retirement investment vehicles there are and what you should know about each one of them. We’ll tell you how to leverage these tools to build your wealth and take advantage of tax-saving benefits along the way. Here’s what we’ll be covering as we journey down the road to retirement:

This is an episode we explore:

• What to do with your money so you minimize the amount you pay in fees and taxes
• Retirement tools everyone can use
• Retirement tools for employees
• Retirement tools for the self-employed, employers, and side hustlers
• The difference between retirement savings vehicles: 401(k), 403(b), Traditional IRA, Roth IRA, Simple IRA, SEP IRA, and Solo 401(k)
• Which retirement accounts offer the best tax-saving investments
• Why you need to prioritize how you save money now
• The super awesome benefit of 457(b) plans

Tune In and Go Beyond Common Sense with the Money Guys

This show would not be what it is today without the support of our wonderful listeners. We strive to continue making the show better and your feedback is an important part of that process.

If you have any questions/suggestions/comments/concerns (or just want to say hi!), feel free to reach out to us: brian@moneyguy.com and bo@moneyguy.com. You can also join the conversation on Facebook or connect on Twitter @MoneyGuyPodcast.

If you enjoyed this episode, be sure to join our community! You’ll get immediate access to 15 of our most recent shows, plus you’ll get future podcasts delivered straight to your inbox so you can get in on the action right away.

Individual Retirement Accounts (IRAs) are critical in securing financial independence in retirement. Because of this, Brian and Bo took the opportunity to discuss what mistakes they see clients make — and how you can avoid them. This episode was inspired by an article published by Morningstar back in February called 20 IRA Mistakes to Avoid.

These mistakes are also applicable to other retirement plans as well! If you’re contributing to a 401(k) or 403(b), you’ll want to listen in and understand the 12 mistakes the Money Guys say you must avoid making.

Here’s a quick rundown of the errors Brian and Bo cover in this podcast:

Procrastinating on Making Contributions

The Morningstar article cites the fact that if you’re investing later rather than sooner, you could be losing out on growth thanks to compound interest.

Many people also think they can take their time if they’re getting an extension on their taxes. That doesn’t apply to traditional and Roth IRAs — those contributions need to be in by April 15th.

Not Understanding Tax Bracket Implications

Do you understand the retirement account options you have and the impact each can have on your taxable income? Brian and Bo explain when you should invest in a Roth IRA over a traditional IRA, and which retirement vehicles you should prioritize.

Not Understanding Roth Conversions

If you’re looking to retire early, you’ll be able to plan your tax strategy in advance. Once you retire, you don’t have any earned income, and converting to a Roth IRA might prove to be a good decision as there are no required minimum distributions.

Being Retirement Rich and Liquidity Poor

Having a 7-figure portfolio and nothing in reserves won’t do you any good in the present should something go wrong. Plus, if you retire early and can’t start withdrawing until you’re 59 ½ years old, you’ll need money to tide you over.

Ignoring Spousal Contributions

If you or your spouse work while the other doesn’t, you can still take advantage of spousal contributions. The non-working spouse can use the other spouse’s earned income to make contributions for themselves.

Buying an Annuity

Purchasing an annuity within a retirement plan is usually a bad idea as you’re doubling up on tax shelters. Make sure buying an annuity actually makes sense for your situation.

Treating Your IRA as a Piggy Bank

Say you do leave your job – that technically means you have a distributable event. That doesn’t mean you should make the most of it and buy a new pool or TV. Ignore the temptation to withdraw funds and roll your money over.

Not Updating Beneficiary Designations

Have you divorced or remarried? Then you should update your beneficiary designations – you wouldn’t want your ex-spouse inheriting your money, would you?

Want to grab more tips and understand the mistakes you need to avoid with your IRA? Be sure to tune in to this episode of The Money Guy Show for advice on how to better manage your IRA!

• Details of the Government’s bipartisan economic stimulus program
• “How to drive your tax preparer crazy” discussion with CPA, Brandon Verner
• Listener’s Question Answered: What to do with 401k accounts from prior jobs

Shameless self promotion: Last week I was on the Fox Business Network’s “America’s Nightly Scoreboard” to discuss ways to survive this crazy financial market. If you would like to see me in action then check out this link (click here) .

Helpful links for today’s show:

*The Government’s plan for Economic Stimulus: Wall Street Journal (subscription required) article titled, “Washington Sets $150 Billion Plan to Jolt Economy (click here for link)

We made Money Guy history in this show by having our first phone interview with Atlanta CPA, Brandon Verner (click here for a link to his firm’s site). The site was having some technical issues this morning, so I am providing you with Brandon’s email if you want to contact him directly bverner@vernercpa.com. In this segment I took the advice of several listeners and spiced up an article that I wanted to cover for the show by bringing in an expert to discuss the content with me. The article covered is from the Consumer Report Money Adviser Newsletter titled, “How to drive your tax preparer crazy”. This article is great for those that use a tax preparer to complete their taxes (click on link if you are interested in subscribing to the Consumer Reports newsletter).

In the third segment of the show I answer a listener’s question about what to do with 401k accounts from previous jobs. Listen to the show for guidance on the subject.

** You too can be a part of the Money Guy Show by emailing me your financial questions. In the email please provide me with a quick summary description of your financial issue along with a phone number. If you email me I am going to assume that you do not mind that I may discuss your issue on air (of course we do not have to use your full name or even location to keep your matters private). The email address to send your questions is Brian@MoneyGuy.net

**A Big Word of Thanks**

Thanks for all of the great emails and the iTunes positive feedback. Your ongoing support is what makes this show successful.