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12 Jun 2019

New bill could scrap tax savings tactic for massive IRAs: Tax Strategy Scan by Andrew Shilling

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Post by MoneyRadio Staff
Published

June 11 2019, 10:13am EDT

Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.

Tax savings strategy for massive IRAs could be on the way out
The House cleared legislation that would raise the maximum age for traditional IRA contributions and ease the rules for small employers to set up multi-employer plans, according to this article on CNBC. However, the bill includes provisions that would require non-spouse beneficiaries of traditional IRAs to withdraw the entire balance within 10 years after the owner’s death, a move that would scrap the strategy that would allow heirs to “stretch” the inherited account’s tax-deferred growth based on their life expectancy.

IRA accounts

It may soon get easier for clients to move 401(k)s when switching jobs
Moving retirement assets with a former employer to a new plan would be easier under a new proposal from the U.S. Labor Department, according to this article on The Wall Street Journal. The proposal would require an employer to roll over the workers’ 401(k) funds automatically to a tax-advantaged IRA when they resign, and the assets would remain in that account until they get hired by a new company offering a similar plan. Under the existing rules, “[t]he options for moving a retirement account are expensive and time-consuming, and it destroys retirement savings for people with small accounts,” an expert says.

3 tax tips for 2019 — and beyond
Clients who want to minimize the tax bite on their income should make sizeable contributions to traditional retirement accounts, according to this article on Motley Fool. The contributions are made on a pretax basis, reducing their taxable income and subsequently their tax bill. Clients who have a side hustle should ensure that they report their income and pay quarterly estimated taxes. Hiring a professional is recommended especially when they need advice on their tax situation.

What part-time work means for client portfolios, Social Security, Medicare
Working part-time in retirement can be a smart move for seniors especially if they fear that their savings will not last long and the wage income will help reduce their withdrawals from their investment portfolio, according to this article on CNBC. Those who are on Social Security should also be mindful of the wage income they receive especially if they haven’t reached their full retirement age, as a portion of their benefits could be taxed once their combined income exceeds a certain limit. Social Security will also withhold $1 for every $2 of income in excess of a certain limit. “It can be a very ugly surprise,” an expert says.

Tax overhaul opens up nonresident alien investment in S corporations
The new tax law has relaxed some of the restrictions for S corporation ownership, allowing nonresident aliens to hold ownership interests in companies with such structure through an “electing small business trust,” an expert on Crain’s Cleveland Business writes. This means that nonresident aliens could invest in these businesses tax-free, the expert says. “S corporations are regarded as ‘pass-through entities,’ referring to the way tax law allows income to pass through the entity untaxed for distribution to shareholders. That allows business owners to pay tax at only the personal level, not at both the business and personal level.”

Andrew Shilling

Andrew Shilling is an associate editor for Financial PlanningBank Investment ConsultantOn Wall Street and Money Management Executive. Follow him on Twitter at @AndrewWShilling. https://www.financial-planning.com/news/house-bill-could-scrap-tax-savings-strategy-for-massive-iras-tax-strategy-scan

This article is suggested reading by Secured Financial Services, LLC and President and Chief Executive Officer of Secured Financial Solutions, LLC, Anil Vazirani. Please visit https://secured-financial-solutions.com/

Retire and Stay Retired Safe! Smart! Secure!

Based in Scottsdale, Arizona, Secured Financial Solutions is one of the leading financial service firms in Arizona, catering to the financial planning needs of retirees and pre-retirees.

One of the benefits you can count on when working with one of our financial advisors is an outstanding personal relationship with an advisor. As a client, you will deal directly with a financial advisor who will take the time to understand your situation, objectives, estate planning, and retirement planning needs as well as your risk tolerance. We work directly with other advisors as well as CPAs, attorneys and trustees, to ensure that the investments we make will align with your estate plans, and that you are not faced with heavy tax burdens.

You can expect Secured Financial Solutions to develop comprehensive solutions to your complex wealth management and estate planning needs. Our one-on-one approach helps you achieve your financial planning goals, including maximizing your estate, retirement planning, minimizing your tax obligation, and continuing your family legacy. Our investment advisors will work with your CPA, attorneys, and other trusted professionals to help you make intelligent choices that align with your financial and personal goals.

This article is suggested reading by Secured Financial Services, LLC and President and Chief Executive Officer of Secured Financial Solutions, LLC, Anil Vazirani. Please visit https://secured-financial-solutions.com/

Retire and Stay Retired Safe! Smart! Secure!

Based in Scottsdale, Arizona, Secured Financial Solutions is one of the leading financial service firms in Arizona, catering to the financial planning needs of retirees and pre-retirees.

One of the benefits you can count on when working with one of our financial advisors is an outstanding personal relationship with an advisor. As a client, you will deal directly with a financial advisor who will take the time to understand your situation, objectives, estate planning, and retirement planning needs as well as your risk tolerance. We work directly with other advisors as well as CPAs, attorneys and trustees, to ensure that the investments we make will align with your estate plans and that you are not faced with heavy tax burdens.

You can expect Secured Financial Solutions to develop comprehensive solutions to your complex wealth management and estate planning needs. Our one-on-one approach helps you achieve your financial planning goals, including maximizing your estate, retirement planning, minimizing your tax obligation, and continuing your family legacy. Our investment advisors will work with your CPA, attorneys, and other trusted professionals to help you make intelligent choices that align with your financial and personal goals.

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