SECURE Act Highlights: Jonathan DiGerolamo of Finish Strong Addresses one of the Drawbacks of the SECURE Act

CHINO HILLS, Calif., May 3, 2023 /PRNewswire/ -- Congress has been the most active it has in decades by introducing and passing legislation that brings sweeping changes to retirement savings plans. It is perhaps more important than it has been in recent history to consult with a financial professional that can provide guidance on these changes. When asked about one of the most impacting changes resulting from recent laws, Jonathan DiGerolamo, president, and founder of Finish Strong Financial, had this to say, "at Finish Strong Financial, all our clients receive an income plan that maps out their retirement distributions and can adapt to increasing inflation. Our clients do not worry about income; instead, they focus more on leaving a legacy for their heirs. Fortunately for them, the new SECURE Act has no significant implications if they are trying to leave money to their spouse. However, if their goal is to leave money to the next generation, which is the case for many of our clients - then the new SECURE Act creates a few challenges regarding estate planning." 

One of the first significant challenges is the elimination of the "Stretch IRA" provision with the introduction of the new law.

The "Stretch IRA" allowed non-spousal beneficiaries to slowly take Required Minimum Distributions (RMD's) from the inherited accounts throughout their lifetime, allowing them to mitigate taxes and avoid depleting the inheritance too quickly. Under the new provisions of the SECURE Act, the assets in an inherited IRA must be withdrawn within just ten years. Forced withdrawals are less than ideal in most cases for the beneficiaries if they are still working, especially with larger accounts, as the effect of these withdrawals may trigger a higher tax liability for them.

DiGerolamo also added, "on the bright side, if you know someone with a Stretch IRA, they will still enjoy the old stretch provisions as they were grandfathered in. However, moving forward, the new SECURE Act has changed the rules for non-spouses inheriting qualified plans, like 401(k) and IRA plans, so a strategy is crucial to navigating the new law." Inheriting money is always welcome, but many of these beneficiaries are still working when they inherit these accounts. A large withdrawal from a retirement account may push the beneficiary into a much higher tax bracket than they otherwise would have been in. 

The new SECURE Act is not all bad news, however. There are strategies that can be implemented today by the current account owners that can help mitigate the effects of the new SECURE act rules. 

Roth conversions are a big part of our practice at Finish Strong Financial, and this is one of the best tax environments to consider a Roth conversion since most people would agree that we are in historically low tax rates.

Your loved ones will surely appreciate inheriting your tax-free dollars in a Roth over your taxable dollars elsewhere. However, there is a "sweet spot" regarding how much to convert each year, for everyone, depending on your tax situation. Talking to your advisor and/or tax professional has never been more important to see if a Roth conversion strategy would benefit your legacy planning.

Finish Strong Financial Services and Kinetic Investment Management, Inc. are two separate entities. Insurance products and services are offered and sold through individually licensed and appointed agents in all appropriate jurisdictions under Finish Strong Financial Services. Investment Advisory Services are offered through Kinetic Investment Management, Inc. a registered investment advisor.

Contact:
Samuel DiGerolamo
909-530-3050
[email protected]

SOURCE Finish Strong Financial