Congress has passed and President Trump has signed into law significant retirement reform which will go into effect on 1/1/2020. The new law has many provisions which involve expanding and preserving retirement savings, administrative improvements, and revenue provisions.Read More
The U.S. House of Representatives easily passed the SECURE Act of 2019 (H.R. 1994) 417-3 on May 23, 2019. The U.S. Senate currently has its version of retirement reform under consideration – the Retirement Enhancement and Savings Act (RESA) of 2019 (S. 972). Both acts have many retirement reform provisions involving expanding and preserving retirement savings, administrative improvements, and revenue provisions.Read More
After a long and contentious political battle, the U.S. House (224-201) and U.S. Senate (51-48) have passed the Tax Cuts and Jobs Act of 2017. President Trump signed the bill into law and it goes into effect on 1/1/2018. Major changes in personal income taxes, business income taxes, and estate taxes will go into effect for tax year 2018.Read More
The U.S. Congress has spent the last few months slowly working its way through the legislative process to provide major tax reform. This reform impacts personal income taxes, business income taxes, estate taxes, and taxation of foreign business income. The U.S House of Representatives passed its version of the Tax Cuts and Jobs Act of 2017 in early November. The U.S. Senate just passed its version of the Tax Cuts and Jobs Act of 2017 last week.Read More
Which entity to own life insurance?
The popularity of the irrevocable life insurance trust (ILIT) is well documented. Billions of dollars have been gifted by estate owners to single life and survivorship life irrevocable trusts to help fund the payment of federal estate taxes. Yet, a number of disadvantages revolving around lack of flexibility and lack of control discourage the use of such trusts in certain situations. When estate owners realize an irrevocable trust cannot be changed, they sometimes decide to think about it. Or when estate owners realize they don't own the cash value of the policy and have no access to it for lifetime financial needs, they feel a loss of control.Read More
Certain high-earners face a double-barreled shot of federal income taxes for 2016. The maximum marginal tax rate for these high-earners remains at 39.6% in 2016 and the provisions of the Affordable Care Act (aka ObamaCare) are still in effect.Read More
The IRS announced the “one rollover per year” rule in 2014, which is an important rule to keep in mind when planning for multiple IRA accounts. IRC Section 408(d)(3)(B) has been interpreted by the IRS to mean that an IRA owner can only do one 60-day IRA to IRA rollover per year. However, the IRS also reaffirmed that an unlimited number of “direct transfers” can be made when transferring funds directly from one IRA account to another IRA account.
At one point or another, you have encountered a client who has multiple IRA accounts that may have been created at different times with different funding products. You may have even recommended two separate IRA accounts to a client, each with different financial purpose for different designated beneficiaries. In either one of these events the US Treasury Regulations treat certain IRA accounts differently when it comes to distributing IRA Required Minimum Distributions (RMD) from these accounts once the client reaches age 70½.Read More
Currently, the US Senate is considering legislation that would eliminate a life expectancy payout for inherited IRAs.
An experienced financial professional should keep their clients informed of the many different roles life insurance can play to meet financial, retirement, and protection needs. The American Taxpayer Relief Act of 2012 (ATRA) permanently increased the federal estate tax exemption. This increased and indexed exemption may reduce and possibly eliminate the need for life insurance to pay estate taxes on a case by case basis.
The 2016 federal exemption is now indexed to $5,450,000 for an individual and $10,900,000 for a married couple. The federal estate tax rate is a flat 40% for taxable estates above the exemption amount. Many clients who may have been exposed to federal estate taxes in the past may no longer need to worry about federal estate taxes in the future because of this very high exemption. Very, very few individuals and couples have a net worth in excess of these federal exemption amounts. Only the super-wealthy still face the daunting task of paying federal estate taxes.Read More