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What the SECURE Act Could Mean for You

Greetings!

As of January 1, 2020, many changes from The SECURE Act became effective. Some of the more notable changes that could impact your financial future involve the following:

Major Changes by New Law:

  1. Required Minimum Distributions (RMDs) Start at 72, not 70 ½
  2. Traditional IRA Contributions After 70 1/2
  3. Inherited Retirement Accounts
  4. Adoption/ Birth Expenses
  5. Changes in 529 Plans

RMDs Starting at 72: The new law only applies to the people who turn 70 ½ after December 31, 2019. So, if someone turned 70 ½ in 2019, the person must take their RMD in 2019 and beyond.

Traditional IRA Contributions After 70 1/2:  The law puts an end to the restrictions on individuals contributing to an individual retirement account (IRA) after 70 1/2. If individuals have earned income, they may continue the contributions.

Inherited Retirement Accounts: Inherited Retirement Accounts, sometimes known as “Stretch IRAs”, can be used to distribute assets over the beneficiary’s lifetime. Due to the recent changes, those assets must be distributed within 10 years of inheritance. There are still exceptions for spouses, minor children, disabled individuals and those less than 10 years younger than the decedent. This change will only impact accounts inherited starting in 2020, not existing inherited accounts.

Adoption/ Birth Expenses: The new law allows for new parents to withdraw up to $5,000 from an IRA or employer sponsored plan penalty-free. These withdrawals can be used to pay for related expenses through the first year after birth or adoption. Taxes will still be paid on the pre-tax contributions, but no penalties will apply to the withdrawals.

Expanding 529 Plan Savings: Recent changes expand what a 529 savings plan can cover. These plans can now cover homeschooling, private elementary, secondary or religious schools. It also allows individuals can now use assets in college-saving plans to repay up to $10,000 in qualified student loans.

What are the next steps you should take?

  • Individuals who turned 70 1/2 prior to December 31, 2019 will continue to take their required minimum distributions as they have been.
  • Individuals who have estate plans that include leaving retirement accounts to their successors should consider reviewing those plans and have a conversation with a financial planner, tax advisor, and attorney to determine whether any changes would be suitable.
  • Individuals who are older than 70 1/2 with earned income should meet with a tax advisor and financial planner to decide whether Traditional IRA contributions would be beneficial for their financial situation.

Contact our office with any questions you might have.

The opinions voiced in this material are for informational purposes only and are not intended to provide specific advice to any individual. Consult your legal, tax, and/or financial advisor to determine what is appropriate for your situation.

PWM

Away from the Office

February 10th – 17th 

Woody will be out of the office. If you need anything, please contact Debbie at debbie@partnershipwm.com or by calling the office.

February 17th

Our office will be closed for President’s Day.

We are always accepting donations for the local animal shelters – toys, tennis balls, collars, leashes, food, cat litter, cardboard trays, office supplies, cleaning supplies, towels, mats, washcloths, etc. We will accept donations Monday-Friday between 9am & 5pm.

Family

Heidi, Elise, and I recently went to ClimbZone. Each of us has enjoyed climbing in the past and we thought it would be a great indoor activity in the cold.

I was amazed at how much Elise was able to climb. The girl never took a break. She’d climb part way up, drop down, get right back on, climb a little higher, then repeat. I was getting tired after each of my turns, yet she kept motoring on.

My favorite part of ClimbZone is that their walls have scenery on them. Not only was it more enjoyable to climb the Statue of Liberty than a generic wall, in some cases two of us were also able to climb the same surface next to each other. In one instance, Mt Rushmore, we were able to climb it as a family.

If I could bottle some of Elise’s energy, I might be able to do a few more walls during our next visit.

I hope you enjoyed this month’s newsletter!

Best Wishes,

Woody Derricks, CFP®, ADPA®

President

CA Insurance License #0C40217

As a Registered Investment Advisor (RIA), Partnership Wealth Management is committed to providing our clients with financial planning and wealth management services to help them work towards their financial goals. At Partnership Wealth Management, we have a long history of working with the LGBT community. Among the many services we offer are financial planning and estate planning strategies for gay and lesbian couples. Financial planning is an important part of preparing for the future; contact us today to get started.

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Partnership Wealth Management (PWM), is a registered investment advisor located in Maryland. PWM and its representatives are in compliance with the current filing requirements imposed upon registered investment advisors by those jurisdictions in which PWM maintains clients. PWM only transacts business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements.