Time for a Tax & Legacy Plan

In this week’s Hidden Wealth Review, I teach why it’s important to have a retirement risk plan in place. The timing couldn’t be more critical than it is right now. For years I’ve taught about protecting yourself from taxes and market losses. Now, there’s a new retirement threat in place and proves the need to get a tax and legacy plan in place to protect your retirement savings from it.

A proposed new law has already passed in the house, with bi-partisan support. I’m referring to the SECURE act, which Forbes has called “the great hidden money grab.” The SECURE act states that a non-spouse inheritor of a tax-deferred retirement account (IRA, 401(k), 403(b), etc.) can no longer amortize the inherited account over their lifetime. Sometimes referred to as a “stretch IRA,” this tax code provision allowed the inheritor to spread out the tax on the inherited account over their lifetime.

Our children and grandchildren are going to get hammered by the tax from our tax-deferred retirement accounts. In the House’s version, the inheritor would have just 10 years to take all the money from the inherited IRA. In the Senate’s version, the inheritor would have as little as five years to take all the money out of the inherited IRA. The chart below shows the dramatic reduction in the amount of money (hence, the increase in taxes) that an inheritor would suffer under the House’s ten year forced liquidation, once the current stretch provision is eliminated.

image showing 10 year death of stretch

In this example, a child who inherits a $1 million tax-deferred retirement account at age 45 under the current rules would have over $2 million of the account left at age 86. Under the House’s SECURE plan, that amount drops to zero and results in the inheritor leaving no future inheritance to the next generation!

Whose legacy are we planning, ours or Uncle Sam’s? In an example from Reuters, a grandchild inherits a $1 million IRA that’s earning a 7% return. Under the current distribution rules, the 25-year-old grandchild would be able to keep an extra $400,000 over the same IRA distribution under the proposed SECURE rules. Instead of inheriting a $1 million IRA, the grandchild’s inheritance is $400,000 less due to the higher taxes over a forced shorter distribution period!

The timing and shifting opportunity is here. Tax rates are currently lower and there’s uncertainty about next year’s election. Now is the time to save tax. Take the time to learn more. Most Americans have saved their retirement money in tax-deferred accounts. You can save tax by having a strategic tax plan. Many people are predicting a recession before next year’s election. Now’s the time to get your savings protected against the coming market losses.

If you want to learn how to avoid the SECURE Act Tax Trap, register for next Tuesday’s Wealth Protection Webinar now, while space is still available. To register for this no-cost, no obligation event, go to www.RetirementProtected.com, enter your information and submit the registration. Once you’ve registered, you’ll receive an email containing a personal link to join Tuesday’s event.

I encourage you to register for your preferred webinar time now, because these events fill up fast. For those who attend this event, I will gift you an e-copy of my latest book, The Baby Boomer Retirement Breakthrough-The Unfair Advantage to a Safe and Secure Retirement.

-Spouses are encouraged to attend this event together-

www.RetirementProtected.com
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(855) No Tax 2 U
(855) 668-2928

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Here’s to your Hidden Wealth,
Chuck Oliver
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