UNDERSTANDING THE SECURE ACT Jim Coltrin and Andy Bailey

Understanding the SECURE Act and How it Affects You

By Jim Coltrin and Andy Bailey | Managing Partners, True North Advisors

For some time now, we’ve been following the SECURE Act as it made its way through Congress. Now the retirement savings reform bill has become law, and we wanted to offer an update on its provisions.

The Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 broadens the effectiveness of individual retirement accounts and employer-sponsored retirement savings plans. Essentially, it expands access to tax-advantaged retirement savings accounts and, ultimately, aims to help Americans save enough for a secure retirement. That’s a goal we can all get behind.

Among other things, the act: • Provides a startup credit to make it easier and more affordable for small businesses to set up retirement plans for their employees, even allowing them to band together to set up a plan for their collective employees.

• Introduces a credit for those small employers who encourage savings through automatic enrollment, which has been shown to increase employee participation and boost retirement savings.

• Removes the age cap that limits contributions to traditional IRAs after age 70½, which would give working people more time to contribute toward retirement.

Delays required minimum distributions (RMDs) until age 72, which allows the account to continue growing as life expectancies increase. The SECURE Act also eliminates the “stretch IRA,” an estate planning strategy that allowed much-younger beneficiaries to inherit an IRA and “stretch” the required minimum distributions across their actuarial life expectancies. Basically, the heirs received smaller RMDs over a longer period of time until the money ran out, reducing their tax liability on the withdrawals. In the meantime, the account would continue to grow tax-deferred.

Withdrawals over a lifetime are no longer an option for inherited defined contribution accounts. The SECURE Act gives non-spouse beneficiaries (including trusts) just 10 years to withdraw all the money from inherited IRAs, 401(k)s or other defined contribution plans. These supersized distributions are likely to trigger higher taxes for heirs, with few exceptions. This change does not apply to IRAs inherited in 2019 or prior, but will be effective for IRAs inherited in 2020 and beyond.

As we sort through the potential tax, retirement and estate planning implications, we are always here to assist you with your planning needs. To learn more, call us at 423-531-4111.

Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. While familiar with the tax provisions of the issues presented herein, Raymond James financial advisors are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional.

© 2019 Raymond James Financial Services, Inc., member FINRA/SIPC. Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC, and are not insured by any financial institution insurance, the FDIC/NCUA or any other government agency, are not deposits or obligations of the financial institution, are not guaranteed by the financial institution, and are subject to risks, including the possible loss of principal. True North Advisors and the financial institution are not registered broker/dealers and are independent of Raymond James Financial Services. Investment advisory services offered through Raymond James Financial Services Advisors, Inc.

PumPkin SPice mouSSe

This light and creamy pumpkin dessert is the ultimate tastes-like-fall treat.

INGREDiENTS

• 1 15-ounce can pure pumpkin (1 3/4 cups) • 1 tsp. grated peeled fresh ginger • 1/4 tsp. ground cinnamon • 1/4 tsp. freshly ground nutmeg • Kosher salt • 3 oz. cream cheese, cubed • 1 tsp. pure vanilla extract • 1 c. sweetened condensed milk • 2 c. heavy cream, cold • Sour cream and crushed ginger cookies, for serving In medium saucepan, combine pumpkin, ginger, cinnamon, nutmeg, and pinch salt. Cook on medium, stirring frequently until steaming heavily, darker in color and slightly thicker, about 5 minutes.

Remove from heat and stir in cream cheese and vanilla until smooth. Transfer to bowl, then stir in condensed milk. Let cool completely.

Using electric mixer, beat cream until medium peaks form. Fold in cream cheese mixture, then spoon into 4-ounce jars. Chill until ready to serve. Makes 8 cups. Serve dolloped with sour cream and crushed ginger cookies if desired.

DIRECTIoNS