THE FISCAL BLUE PRINT

WITH COACH JEFF MONTGOMERY

Episode 31: The Coronavirus & some SECURE Act Q&A!

Here are just a handful of the things that you’ll learn:

Everywhere you look someone’s screaming about it or writing an alarming article about the new SECURE ACT!

Microphones and media today are guilty of manipulating the masses in the exact same way. The truth is, many of you are likely here [today/tonight], concerned that something called The SECURE Act might leave you quite unsecure financially.

So let’s take a few minutes together here and unpack this thing in language that everyone here can easily understand…because while everyone else is telling you to brace yourselves, I’m telling you that there are really only a few things that 99 percent of you listening really need to concern yourselves with, and the rest? It is complete hype.

 

(1:00) Disclaimer: Please do not take advice from me on this show. As a licensed Fiduciary I am only allowed to give advice to clients. So, unless you’re a client I can’t give you advice because I don’t know you. So, think of this as helpful hints and education only. And please before implementing any information or ideas you hear on this show always consult your legal adviser, your tax adviser, and your financial adviser…………. right? that’s just common sense.

 

(1:20) Practical Planning Segment

 

The Coronavirus: This has been all over the news, and we know that some folks are nervous (both about the market reaction as well as about the actual virus.) So let’s lend some perspective from some previous epidemics.. Obviously, past performance is not necessarily an indication of future results, and Coronavirus can certainly be different. But, we think its important to take these into account to hopefully ease some concerns.

 

The Avian flu: the 6 months after the pandemic was reported, the S&P was up 10.6%, 18% after 12 months. Another example from April of 2003: SARS. In the next 6 months the S&P was up 14%; the next 12 months, the market was up 20%. The ZIKA virus of 2016: The market recovered by 12% over the following 6 months and 17% over the next 12 months.

 

Now, a negative example: AIDS in 1981: The market declined 16% in the following 12 months.

 

It’s hard not to look at your portfolio and feel some sort of pain when watching it decline. Naturally, our instincts want to have some sort of control over this essentially uncontrollable situation. So, we recommend to our clients  and we encourage folks to take a step back and ask if your reaction is emotional or logical? What is the big picture?

 

Go back to your original target, risk tolerance and plan for your portfolio and try to stick to that strategy! Maybe it’s time to re-balance! This strategy is based off math & science, not emotion!

 

 

(13:00) SECURE ACT Q&A

 

Are existing Stretch IRAs grandfathered in? Yes! Short answer.  If you have an existing Stretch IRA or if the person died in 2019 then the old Stretch Rules still apply.

 

(16:00) So, do I understand correctly that I can now wait until age 72 to take my first RMD? It depends on if you are already taking your RMD. In other words, did you turn 70 ½ last year in 2019. If you did then you must take your 1st RMD either last year or you have until April 1st of the year after you turned 701/2 SO that’s this April. If you did not turn 70 ½ last year then you can wait until the year you turn 72 or by April 1st of the year after 72.

 

(18:15) If I inherit my mother’s IRA but I pass away before the 10-year period is up can I name my child, the beneficiary and she get a new 10-year period? YES, YOU CAN NAME HER THE SUCCESOR BENEFICIARY BUT No. the original 10-year period must be honored

 

(22:40) So, is it your understanding that Gov plans, are not subject to the Secure Act RMD rules unless the employee/participant dies in 2022 or after? Yes……………. Includes 403(b) and 457 plans SPONSORED by government entities. Such plans can also be sponsored by other entities, such as non-profit groups. But yes, if they are sponsored by a governmental entity and the participant dies before 2022, the ‘old’ rules still apply!

Sources: https://www.financial-planning.com/news/secure-act-tax-law-change-undermines-stretch-iras

https://www.cnbc.com/2020/02/03/new-stretch-ira-rules-could-make-this-type-of-trust-more-popular.html

 

The Wall Street Journal reported, “Congress is Coming for your IRA.”
Source: https://www.wsj.com/articles/congress-is-coming-for-your-ira-11562713559. Accessed 12/27/19.

Forbes published an article called, “The Hidden Money Grab in the SECURE Act.”
Source: https://www.forbes.com/sites/jlange/2019/06/11/the-hidden-money-grab-in-the-SECURE-act/#6e577e833bbd. Accessed 12/27/19.

MarketWatch read: “How the SECURE Act could create a disaster.”
Source: https://www.marketwatch.com/story/inheriting-a-parents-ira-or-401k-heres-how-the-SECURE-act-could-create-a-disaster-2019-12-26. Accessed 12/27/19.

Retirement Watch reported it could be a “Retirement Bombshell” [The Facts on The SECURE Act].
Source: https://www.retirementwatch.com/offer/rw-retirement-doomsday?source=RWDD16&gclid=CjwKCAiA9JbwBRAAEiwAnWa4QxL_QCeI6q7HeyUL3HFauhfQOExNYPi3miB8YkPP84X8P5tiLThgzhoCKTcQAvD_BwE. Accessed 12/27/19.

 

Final Disclaimer:

“We appreciate you joining us today for this episode of The Fiscal Blueprint.

Be sure to visit fiscalblueprint.com to access the most recent content available including all past shows.

Remember it’s not about the money but about your life!

Having a mindset and living a life of abundance rather than scarcity will change the direction of your life forever!! Enjoy the Journey!!!

“Opinions voiced in this recording are for general information only and not intended to offer specific advice or recommendations to any individual. All performance references are historical and no guarantee of future results. All indices are unmanaged and not available for direct investment.”

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