Bruce Hosler, Founder and Principal of Hosler Wealth Management LLC., shares with viewers how the “Secure Act” has done away with the “Stretch IRA.” The “Secure Act” killed the ability of IRA beneficiaries to take required minimum distributions over their remaining life expectancy period. In addition to our analysis of the most significant changes of the Secure Act, Bruce speaks to us regarding the five special exceptions to the new “10-year rule” of the “Secure Act” and the importance of strategic beneficiary planning.
By downloading your free copy of Bruce Hosler’s whitepaper, “The Secure Act demands new beneficiary planning for your IRA and Roth IRA!“, you will learn more about how this new law could drastically affect the beneficiaries of your estate financial future and the steps you will need to take to reach a more positive outcome.
Terri Ouellette: I have a question for you. How is your financial health? Well, our next guest says when you combine tax advice with retirement planning strategies, great things can happen. But there are some things that you need to know. Some changes that could significantly impact your family. I want you to meet Bruce Hosler, he is the founder and principal of Hosler Wealth Management.
It’s great to have you on Sonoran Living Bruce, and you are bringing to our attention this morning something that a lot of people haven’t heard of, it’s called the Secure Act. What is it, and what does it mean to us?
Bruce Hosler: Thank you, Terri, it’s great to see you this morning. The Secure Act was passed in December of 2019 and the biggest part of that is that it limited the Stretch IRA. No longer can we leave the IRA to our children to take the income out for their remaining life. They now have to pay the taxes and draw it out in just 10 years.
Terri Ouellette: Okay, so, In the past we were, they could stretch it out, it could build interest and grow but now we have a time limit. What does that mean? How does that impact us financially or them?
Bruce Hosler: Well it means as soon as you pass away the clock begins running and your children only have 10 years to get it out. And, if they’re not getting good advice, imagine that they waited you had a million-dollar IRA, it doubles in ten years and then they wait to the last minute and take it all out. Two million dollars taxable in one year, it’d be a travesty.
Well the other thing that affects them then is that they have to start adding that income on top of their regular earning income. So, it is a big tax increase to your children.
Terri Ouellette: Yeah, okay, so anybody sitting at home right now and this is all news to you, uh it’s okay; it was news to me too, because this actually just passed in December of 2019.
How many people are you finding have never – don’t even realize that this act was created?
Bruce Hosler: The financial planning community is just barely realizing right now how important this issue is and coming up with ways for us to manage this. And, to provide a secondary backup way for the children to stretch those payments out over their remaining life.
Terri Ouellette: Okay, so there’s this 10-year rule and there’s always exceptions to every rule, right? Bruce, what are the exceptions for that?
Bruce Hosler: So, we have exceptions obviously if you’re married. Your spouse is an exception. So, they can continue to take RMDs based on their lifetime.
Also, if you have a beneficiary that has a chronic illness or a disability or if you have a minor child under the age of majority. Until they reach the age of majority, they can continue to stretch. And, then if you have perhaps, a sibling or someone else that’s less than 10 years younger than you, they can continue to do this stretch. But, everyone else, they have to take it out and pay the tax in ten years.
Terri Ouellette: Ah, that is so wrong, so wrong. All right, so, I want to talk about Roth IRAs because those are a different type of IRA. Uh, explain what they are and why it makes a Roth IRA so advantageous right now.
Bruce Hosler: So, what you don’t want to have is your children to have that big tax bill. When they have to pull the ira out. So, if you strategically plan right now and begin to convert your IRA to a Roth IRA, when they have to take it out they can do that but it’s income-tax-free. The other benefit is they can wait the entire 10 years, and at the very last minute take it out income- tax-free. And, all that growth during the 10 years, it has grown income-tax-free for that full 10 years after your passing.
Terri Ouellette: So, you can convert it doesn’t matter how much money you have in a different IRA?
Bruce Hosler: Correct, it doesn’t matter if you’re Bill Gates, how much you make or how much you have, everyone has the right to convert the traditional IRA to a Roth IRA.
Terri Ouellette: Oh my gosh, Bruce, I am just, I’m – my feet have been swept out from underneath me when we started talking about this earlier. So, thank you. So much really good information and, uh, it’s really really important to get the proper financial advice right now to
Bruce Hosler: Yes, yes.
Terri Ouellette: Okay, all right, well let me give you Bruce’s information. He also has a really good explanation of what the Secure Act is on his website. Um, it really helped me understand it a lot better too, so, you can check it out, just visit: hoslerwm.com, and if you want more information you can reach out to Bruce at 480-994-7342.
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