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Home » Resources » Frequently asked questions » IRA & SECURE Act FAQs

IRA & SECURE Act FAQs

    • What is the distinction between a Roth IRA and the traditional variety?

    • A traditional retirement account will provide you with a tax benefit in the near term because you do not pay taxes on the contributions into the account. On the other side of the coin, the distributions that you accept are subject to regular income taxes.

      Roth account holders pay taxes on the income, and they use part of the remaining income to fund their accounts. Since the taxes are already paid, there are no taxes to remit when distributions are taken.

    • If you don’t need the money, can you let it add up as part of your estate plan?

    • You can definitely do this if you have a Roth individual retirement account because there are no required minimum distributions (RMDs). Distributions are mandatory for traditional account holders, so you cannot choose to let the assets accumulate indefinitely.

      Why is this the case? The IRS has already gotten their money from Roth account holders, but they want to start collecting something while traditional account holders are still alive.

    • What is the age at which traditional account holders must take RMDs?

    • This question provides the perfect introduction to the changes that have been, and are being, implemented via legislative mandate. Prior to the enactment of the SECURE Act at the end of 2019, the required minimum distribution age for traditional account holders was 70.5.

      A provision in this measure raised the age to 72, and at the time of this writing, another measure called the Securing a Strong Retirement is making its way through the legislative process. This measure is alternately referred to as SECURE Act 2.0.

      It was jointly introduced by members of opposing parties, and it has strong bipartisan support. Plus, a similar measure called the Retirement Security & Savings Act has been introduced to the Senate on a bipartisan basis.

      A provision in these measures would raise the required minimum distribution age to 75.

    • Can you contribute into an IRA as long as you are earning income?

    • The answer is yes, but this is a relatively new development for traditional account holders because it became possible after the enactment of the SECURE Act. Before it came along, traditional account holders could no longer make contributions after they reached the RMD age.

    • What are the other changes that are likely to be implemented?

    • SECURE Act 2.0 includes a provision that would require employers to enroll all eligible employees into their retirement savings plans. Employees would have the ability to opt out if they do not want to participate.

      There is a savers credit for people in lower tax brackets that contribute into retirement savings plans, and the parameters would be changed to include more taxpayers.

      There are many employees that would like to contribute into 401(k) plans, but they cannot spare the income because they make student loan payments. This measure would allow employers to provide 401(k) matches that are tied to student loan payments.

      Another change would increase the 401(k) catch-up contributions for older workers to $10,000, but the details are different in the House and Senate bills. In the Senate version, the increase would apply to workers that are 60 years of age and older for the rest of their careers.

      The House bill allows the catch-up contribution increase for workers that are between 62 and 64 years of age.

    • What is the situation for individual retirement account beneficiaries?

    • A non-spouse beneficiary would be required to take mandatory distributions, regardless of the type of account they are inheriting. The distributions would be taxed if it is a traditional account, and Roth account beneficiaries do not pay taxes on the income.

      Before the SECURE Act was passed, estate planning attorneys would recommend the “stretch IRA” strategy. The idea was to take only the minimum that was required by law for the maximum length of time to take full advantage of the tax benefits.

      Unfortunately, the open-ended stretch is no longer available because the SECURE Act imposed a 10-year limit. All the assets must be taken out of an inherited individual retirement account within 10 years.

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Testimonials

Client Review
July 29, 2020
    

We need to update our Living Trust and attended Schomer Law Group’s seminar. Afterwards we made an appointment and were impressed by the attention Scott Schomer and Liran Aliav gave to our case answering all questions and making suggestions how to minimize the estate tax. All the office staff is very friendly and we highly recommend Schomer Law Group.

Frank & Jutta R
Client Review
July 29, 2020
    

Mr. Schomer does an amazing job at explaining all the intricacies of establishing a trust. He and his team help you every step of the way so you always know what to expect and what you are preparing for. Best education you can get and the best gift you can give your family.

Paula M.
Client Review
July 29, 2020
    

We put off getting a trust for years. After attending a seminar with Scott Schomer we realized that the time had come to get a trust. We were given very good reasons for why we should get a trust. No pressure, just the plain facts. We are very relieved and happy to finally get our trust. Scott and Cesar were very knowledgeable, helpful and listened to our ideas of what we had to say. Any questions that we have now and in the future they are available to assist us to solve them. I recommend the Schomer Law Group and I wish we knew about them years ago.

Phillip G.
Client Review
July 29, 2020
    

When you’re presented with an invitation to attend in a mailer, you may have reservations, this was a truly gift!! My wife and I were educated and guided through the process of creating a family trust.
Both of our parents had attorney’s that “worked” with wills/trusts, but came up short. Fortunately, the Schomer Law Group was there! This is a group of attorney’s that only specialize in estate planning, law, and financial advice, so you know you’re getting expert and personalized advice. This is the best money we’ve ever spent!! Thank you!

Bob L.
Client Review
July 29, 2020
    

We knew we had to update our 10 year old ( 20 page ) trust. After several detailed meetings, Liran and Cesar produced a large ( 300 pages + ) highly detailed trust document that we have used to make sure our family estate is well managed and clearly understood.
They were all very helpful in answering myriad questions and explaining all the various options…

We would strongly recommend the Schomer Law Group to anyone with an estate of even modest means, to assure proper planning…

Bob S.
Client Review
July 29, 2020
    

We had contemplated updating our will and starting a trust for a number of years. After attending a talk by Scott Schomer we realized we were long overdue and the potential downside of not having our affairs in order was significant. Scott and his excellent team made the process simple and seamless. They were great listeners, addressed all our concerns and even pulled and processed all the paperwork from our financial institutions. If you are looking for assistance with estate planning, wills and trusts, we highly recommend Schomer Law Group.

Robert F.
Client Review
July 29, 2020
    

Very competent & informative – friendly atmosphere – ready to answer the most mundane questions – relaxed.

Joan S.
Client Review
July 29, 2020
    

Mr. Schomer was excellent in getting our family trust and estate affairs in order. My husband and I had put off doing this and Scott really made the process easy! He is very passionate in making sure his clients get all that they need and we really appreciated it. I would highly recommend him and look forward to the many years he will be available to assist our family.

Kim

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