Happy New Year! We hope 2020 brings health, happiness, and hope for the future.
We are all thinking of the people and animals of Australia as they deal with the devastating fires. If you are looking to make a donation please consider these options:
Fire departments: In both Victoria and New South Wales, two of the states hardest hit by the blazes, you can donate directly to the state fire authority or to a local fire brigade, many of which are volunteer-based. For fire departments in Victoria, donate at cfa.vic.gov.au. For departments in New South Wales, donate on the government’s website here.
Australia Zoo Wildlife Hospital: Bindi Irwin, the daughter of famed wildlife conservationist and “Crocodile Hunter” Steve Irwin, has been taking in many displaced animals at the Australia Zoo Wildlife Hospital. Donate at azwh.blackbaud-sites.com.
More options and information can be found here: https://www.usatoday.com/story/news/nation/2020/01/07/australia-fires-how-to-help-donate-victims-animals/2832145001/
New Rules for Retirement Accounts in 2020
Many of you may have heard about the SECURE Act, or the Setting Every Community Up for Retirement Enhancement, which was signed into law at the end of 2019 and went into effect on January 1st. There are many provisions within this legislation that will have an effect on our clients. Changes are being made to Defined Contribution plans (like 401ks and 403bs), IRAs and 529 Plans. If you have specific questions about how the SECURE Act will affect you, please reach out to us.
- Inheriting an IRA: This is one of the most important changes in the rules. Up until now, if a beneficiary other than a spouse inherited an IRA, the Required Minimum Distributions, or RMDs, of that account were taken over the beneficiary’s lifetime, starting in the year they inherited the IRA. These were known as Inherited, Beneficiary or Stretch IRAs, since the payments could be stretched over the beneficiary’s lifetime. Now, distributions must be taken within 10 years. This may have unwelcome tax consequences if the individual inheriting the IRA is in their higher wage-earning years since it can no longer be spread out over their lifetime.
Exceptions to the new distribution rule include assets left to a surviving spouse, a minor child, a disabled or chronically ill individual, and beneficiaries who are less than 10 years younger than the decedent. This rule does not apply if you inherited the IRA prior to December 31st, 2019.
We are encouraging all of our clients to evaluate their estate planning and trust documents to ensure they have the proper language in place to account for this change. For more details on how this change will affect your beneficiaries and estate planning, read this article from MarketWatch. https://www.marketwatch.com/story/inheriting-a-parents-ira-or-401k-heres-how-the-secure-act-could-create-a-disaster-2019-12-26
- Changes to RMD Age: Currently, the law states that in the year an individual turns 70 1/2, they must start taking their Required Minimum Distributions, or RMDs. Starting in 2020, the age will change to 72. So, if you turn 70 1/2 on January 1st or later, then your RMD age gets bumped up to 72. If you turned 70 1/2 in 2019, your RMDs will still need to start in 2019.
- Age Limit on Contributions to IRAs: Starting in 2020, there will no longer be an age limit on contributions to IRAs. The law currently states that you cannot contribute to an IRA after age 70 1/2, but that limit has been removed. You will be able to contribute to an IRA no matter your age.
- 529 Plan Changes: 529 Plans are used by parents and grandparents to save for a child’s college education, but what expenses qualify is being expanded. It will now include up to $10,000 per child in student loan payments. For more details on this component of the Act, read this article from Forbes. https://www.forbes.com/sites/katiepf/2019/12/21/you-can-now-use-a-529-plan-to-repay-student-loans/#62bff40c4aab