FREE Portfolio Risk Analysis

Posts Taged retirement-planning

6 Ways that the SECURE Act Might Impact Your Retirement Planning

June 20, 2019 Tags: , , P&S

The Setting Every Community Up for Retirement Enhancement Act (SECURE Act) is a major federal retirement reform measure. This bill puts forth a series of revisions to previous laws governing taxes on retirement income, collection ages, and more.

While it’s not law yet, there is a lot of talk about how the SECURE Act impacts retirement planning for the average American. Investors want to know how this is going to make a difference to their portfolios, present and future. After all, there are a lot of ways in which new regulations can change existing plans for better or worse.

There are dozens of measures included in the SECURE Act, some more significant than others. Here are the ones that are most likely to make a difference to your retirement planning activities or existing portfolio.

1. Provides More Opportunities for Small Businesses to Offer Retirement Plans

Under the SECURE Act, there are more opportunities than ever for small businesses to opt into retirement planning for their employees. This bill has provisions to extend previously unreachable 401(k) sharing options for small businesses by allowing multiple small businesses to work together as a larger group and pool contributions into bigger funds. This would, in effect, give employees of small businesses retirement planning options on par with what they would see if they worked for a larger employer, provided that the owner(s) of the small business join a 401(k) pool.

Until now, small businesses have been limited in their ability to provide a variety of retirement planning options for employees, which can impact a small business’s ability to attract and retain talented employees. Options like SIMPLE IRA and SEP IRA, while adequate, don’t have the same luster as 401(k) options. As a result, many small businesses simply don’t offer retirement plans for their employees. Opening 401(k) options for small businesses can provide value for small business owners and confidence for employees at these companies.

2. Removes Age Limitations for IRA Contributions

Another impact that the SECURE Act would have is the removal of age limitations for IRA contributions. Currently, there is an age limit on IRA contribution that limits individuals over age 70.5 from contributing to IRAs. This seemingly discourages retirement savings for individuals who are approaching or past the traditional retirement age.

Removing the age limitation for IRA contributions will encourage continued IRA contribution, even into one’s 70s and beyond. Interestingly, there is already no age limit for contributions to Roth IRA accounts, so this would bring more balance for investors on the fence about IRA conversion.

3. Add Opportunities for Annuities within Retirement Plans

Provisions in the SECURE Act would provide the opportunity for 401(k) plan providers to add annuities to the 401(k) mix, further diversifying investment options for those who invest in these plans. Until now, there has been hesitation on the part of providers to add annuity options, since annuities have presented a certain level of liability when packaged as part of a 401(k) plan. However, the SECURE Act provisions remove this liability from the provider’s side, which may open more options to add annuities to the 401(k) mix.

4. Extends the Required Minimum Distribution Age

By law, you’re required to take a required minimum distribution (RMD) from certain retirement accounts by the time you reach age 70.5. Some investors don’t appreciate the constriction of this requirement, especially if they’re still working at age 70.5 or don’t plan to fully rely on their retirement savings until a later date.

Under the SECURE Act, investors will see the RMD age moved from age 70.5 to age 72. This provides a cushion for investors to add a final push of savings to their retirement accounts. Of course, if you plan on drawing from those accounts earlier than age 72, you’ll still have the option to do so.

5. Provides Penalty-Free Distribution for Certain Withdrawals

Generally, investors shy away from taking pre-retirement withdrawals from their retirement accounts because of the rate at which those withdrawals are taxed. But in some life circumstances, the future nest egg is a valuable tool that could provide some much needed relief in the short-term.

The SECURE Act, in part, seeks to answer the challenge of accessing retirement funds for certain life changes by removing the penalties associated with these withdrawals. Most notably, the SECURE Act has a provision that allows investors to take qualified withdrawals for the birth or adoption of a child. It opens up to $5,000 in penalty-free withdrawals for a qualified birth or adoption within one year of the child’s birth- or adoption-date.

6. Removes Certain Qualifications from Inherited Accounts

Inherited retirement accounts (401(k)s, IRAs, Roth IRAs) have, in the past, provided beneficiaries with the ability to withdraw funds over the course of their lifetimes. However, under provisions in the SECURE Act, these distributions would be limited to a ten year period.

While this doesn’t necessarily make a big impact for smaller inherited accounts, like 401(k)s, since they’re typically liquidated within a short period of time, it does make a difference for investors collecting so-called “stretch” benefits from inherited IRAs. In a technical sense, IRAs are not strictly retirement accounts. The rationale of the SECURE Act’s limitations is to reduce the length of time that beneficiaries can receive penalty-free inherited IRA distributions and infuse a certain amount of tax money back into the economy, by bringing back penalties for distributions taken outside of the designated decade.

So, How Might the SECURE Act Impact Your Retirement Planning

As an investor, you want the confidence that your investments are working hard for you and will one day, hopefully, help you to reach your future financial goals. With a big piece of legislation, such as the SECURE Act, on the table, there are ways in which today’s planning may not be sufficient for reaching tomorrow’s goals.

Instead of trying to work through this on your own, look to your financial advisor for information about how retirement reform might impact your bottom line. Your advisor can help you to sift through new requirements, evaluate your current accounts, and make adjustments that align you with the track you want to take.

If you have any questions about the SECURE Act or want to learn more about your retirement planning options, contact Puckett & Sturgill Financial Group today for a consultation!

    Important Considerations for Small Business Financial Planning

    May 29, 2019 Tags: , , P&S

    With Small Business Week kicking off the month of May, this is an ideal time of year to consider the unique aspects of small business financial planning. After all, if you are a small business owner, you already know how much goes into the day-to-day of keeping everything running smoothly.

    As a small business owner, there are resources available to help your business profits go the extra mile. Check out some ways to make the most of your small business income and save for a rainy day.

    Keep Track of Your Finances

    Of course, the most important aspect of managing your financial resources is keeping track of the money that you bring in. Accounting software can help you manage income, expenses, invoices, and more, so you can focus on the things that you do best.

    You will also want to prepare a cohesive tax strategy that helps you to determine how much tax you’ll owe at tax time and how you can offset your tax expenses through legitimate business deductions. Before filing, you’ll want to consult with a tax professional to ensure that your numbers are accurate and that you comply with applicable tax codes to avoid unexpected expenses later on.

    Prepare for a Graceful Exit

    When considering retirement, developing a succession plan makes sense. But life can throw plans off course with a sudden twist, and in these cases, succession plans are even more important.

    Your succession plan should ideally pinpoint a potential next owner or buyer and should outline how you will go about dispersing business assets, whether you plan to offer a buyout option to a co-owner or key employee or sell the business to an outside party. No matter if you’re a new business owner or a well-established entrepreneur, taking time to draw up a succession plan is an ideal opportunity to consolidate financial and business records and determine key contributors to your business’s success.

    Your financial advisor may be able to help with organizing these documents and helping you to lay the groundwork for a solid succession plan. With that succession plan in place, you can have enjoy the daily challenges and thrills of running your business with the peace of mind that comes with having a plan for the future.

    Add Value for Your Employees

    Most of us are familiar with the 401(k) programs large companies establish on behalf of their employees, but even if you’re a small business owner, there are still options for you to offer retirement plans for your employees. Offering a 401(k) program can help you to attract top talent and invest your own retirement savings as the company owner.

    In fact, preparing a retirement package for your business allows you to take advantage of pre-tax contributions, which will save you money on the personal and business side of things. Many business owners overlook this aspect of financial planning for their business and come to the end of their careers without a nest egg of their own.

    But you don’t need to let this pitfall endanger your ideal financial future! At Puckett & Sturgill Financial Group, we can walk you through the ins and outs of choosing a retirement plan and can help you develop a customized strategy for implementing a retirement package for your small business. Your next step is as easy as contacting us.

      What are the Benefits of Providing a Company Retirement Plan?

      May 23, 2019 Tags: , , Jacob Sturgill

      When you’re working through your strategy for adding a retirement plan to your employee benefits strategy, you may wonder what the benefits of providing this perk are for your business and bottom line. Even though you may want to offer a stellar package that attracts top talent or sets your business apart from your competitors, it can be hard to see how else your company might benefit long-term from such an offering.

      However, you’ll find that offering a generous package can be a win-win scenario for your employees and for your business. Read on to learn more about the perks of your business providing a company retirement plan.

      Benefits for You as an Employer:

      When you choose to offer a company retirement plan, you can benefit in a direct way through the ability to invest in the plan for yourself. Saving for retirement through a company plan allows you to participate in a plan that you might not otherwise have access to.

      You can also benefit from company tax breaks and incentives from the federal government when you choose to divert income into employee retirement funds. In fact, you can deduct your employer contributions from your current taxes, which can contribute positively to your company’s tax strategy.

      Direct financial benefits aside, one of the biggest perks to offering a retirement plan is your ability to set your brand apart as an employer that provides competitive benefits for attracting new employees. If you find yourself competing for top talent or are working in an industry that’s not particularly well-known for going above and beyond when it comes to employee perks, you could find yourself in an enviable position just for adding an attractive retirement plan to your benefits lineup.

      Even better? If your retirement plan is tied to company profitability, your employees may be more motivated to work hard and push productivity in order to build their retirement income.

      Benefits for Your Employees:

      Of course, one of your ultimate goals in establishing a retirement plan for your employees is to help them succeed in planning their financial futures. To this end, you should consider their financial well-being and ability to make long-term plans a significant benefit to your brand.

      Even though it requires extra research and investment to establish and maintain a company retirement plan for your employees, you should consider this an investment in your employees’ overall happiness and job satisfaction. Both of these factors can contribute a significant return on your investment; after all, happy employees can be very motivated employees.

      When you offer a company retirement plan, you open more savings options for your employees than they might achieve through using a personal IRA investment vehicle alone. Not only can they (and you, as a part of the plan) enjoy the savings benefits of the package, but you and your employees can enjoy the tax benefits of setting aside income for retirement.

      Are You Ready to Talk Company Retirement Plans?

      Another benefit of choosing a company retirement plan is that you and your employees will gain the opportunity to work closely with the financial advisor associated with your plan. Even if you have questions beyond the scope of your retirement plan, you now have a trusted professional to whom you can turn for personalized financial guidance.

      If you’re ready to look into your options for adding a retirement plan to your company’s benefits package, contact Jacob Sturgill today to get a personalized look at your brand’s needs and to receive recommendations for moving forward with your retirement planning!

        For Plan Sponsor Use Only – Not for use with Participants or the General Public.

        This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

        Can I Do A Qualified Charitable Distribution from My IRA?

        April 25, 2019 Tags: , , Jacob Sturgill

        If you’re looking for ways to use your IRA funds, you may consider a Qualified Charitable Distribution (QCD) as a way to meet your required minimum distribution (RMD).

        Outside of the good feeling that comes from contributing to a worthy cause, one of the main benefits of a QCD is that it allows you to exclude the amount donated from your taxable income. Additionally, this amount doesn’t require itemization, which can bring a bit of relief to your overall numbers come tax time.

        Of course, not all IRAs and investors qualify for QCD contributions. Read on to learn whether your situation is ideal for a QMD.

        Qualifying IRAs

        In order to make a charitable distribution with your IRA funds, your IRA needs to fall into one of the following categories:

        • Traditional IRA
        • Inherited IRA, including inherited Roth IRA
        • SEP IRA
        • SIMPLE IRA

        Additionally, you need to be above the age 70.5 at the time that you plan to make a charitable distribution and, in the case of SEP or SIMPLE IRAs, must be no longer receiving employer contributions in order to qualify.

        Giving Limits

        While giving away your funds in the form of QCDs is a strategic way to meet your RMD, enjoy accompanying tax benefits, and benefit from giving to charity you cannot exceed a certain giving threshold. For couples, the QCD cannot exceed $200,000; for singles, the QCD must remain under $100,000.

        Qualifying Charities

        Charitable distributions are intended to be just that: charitable.

        In order to verify the eligibility of a recipient organization, your QCD recipient must not be a private foundation or donor-advised fund. In general, most 501(c)(3) organizations qualify to receive QCDs. If you have a question about a particular charity, consult a financial professional to learn whether it qualifies for your donation.

        Working Through the QCD Process

        Once you’ve got an approved charity and know that your IRA funds are eligible for distribution, you’ll begin the QCD process to release the funds to the charity of your choice. Here’s how the process works:

        Step One: Coordinate with Your RMD

        You will want to distribute funds to a charity through QCD during the same year as your RMD. Ensure that you establish the proper timing for this distribution to coincide with your RMD in order to avoid penalties for missing your applicable deadlines or withdrawal requirements.

        Step Two: Communicate with Your IRA Custodian

        Your IRA custodian can help you to put your QCD plan into action, but there is some information that you need to communicate to get the process started. You need to submit your request in writing and need to specify the dollar amount you’d like set aside for QCD. Additionally, you should request this check be made payable to your charity of choice but mailed to you.

        Step Three: Send the Funds to Your Chosen Charity

        Once you receive the check, you can then forward it to the charity you’ve chosen. When you send the check, be sure to request a receipt so that you can update your tax records accordingly.

        Step Four: Keep Your Tax Info Straight

        When you file taxes for the year of your QCD, you will need to report the donation on your 1040 form. You can enter the donation amount on line 15a and put $0 for line 15b. Take care to note QCD.

        Planning for Retirement

        Whether you’re setting up an IRA or want to learn more about your options for taking your RMD, a financial advisor can offer personalized support for working through your retirement strategy. Contact Certified Financial Planner Jacob Sturgill to learn about how retirement planning can help you make the most of your future.

          Important Disclosures:
          This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.