By Dr. Robert R. Owens ——Bio and Archives--January 30, 2020
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- The Minimum Distribution age for IRAs and 401Ks has been increased. You no longer must face mandatory withdrawal of your funds at age 70 1/2. You can wait until 72. That's more time to grow your savings by staying invested in tax advantaged vehicles.
- Retirees or those who continue work into their 60s and early 70s can now contribute into their IRA until age 72. People who are lacking in retirement savings have additional funding flexibility for a few more years.
- You now have an additional opportunity to execute a Roth IRA conversion. Unlike traditional IRAs, Roth IRAs are tax-free at withdrawal, which is a sensible plan if one expects higher tax rates in the future.
- Employees will soon have the option to select guaranteed lifetime income products or annuities in their retirement plans. Employers will be exempt from lawsuits (called safe harbor) if the insurer does not pay future claims.
- The SECURE Act eliminated the "stretch" provision for IRA or 401K beneficiaries. Previously, a traditional IRA beneficiary had a lifetime to "stretch" the tax advantaged benefits of a bequeathed fund. Now that time frame to distribute the entire inherited retirement account has been reduced to 10 years after the death of the owner. Special exemptions still exist for the surviving spouse and minor children.
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In America today people age 65 and older are twice as likely to be working compared with 1985. According to recently released data from the Census Bureau and Bureau of Labor Statistics (BLS), the percentage of retirement-age Americans in the labor force has doubled since 1985, from its all-time low of 10 percent in January of that year to 20 percent in February 2019. Americans continue to work longer and harder than ever before. And President Trump continues to work to help them provide for their own future. Not just with Social Security, which is meant to be supplemental at best, but with expanded individualized and privatized investment opportunities.
- Provide a maximum tax credit of $500 per year to employers who create a 401(k) or SIMPLE IRA plan with automatic enrollment.
- Enable businesses to sign up part-time employees who work either 1,000 hours throughout the year or have three consecutive years with 500 hours of service.
- Encourage plan sponsors to include annuities as an option in workplace plans by reducing their liability if the insurer cannot meet its financial obligations.
- Permit penalty-free withdrawals of $5,000 from 401(k) accounts to defray the costs of having or adopting a child.
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Dr. Owens teaches History, Political Science, and Religion. He is the Historian of the Future @
drrobertowens.com
Follow Dr. Robert Owens on Facebook or Twitter @ Drrobertowens / Edited by Dr. Rosalie Owens