• Menu
  • Skip to right header navigation
  • Skip to main content
  • Skip to secondary navigation
  • Skip to primary sidebar
  • Skip to footer

Before Header

Call us today for help!  (631) 265-0599
  • Facebook
  • Instagram
  • LinkedIn
  • Twitter
  • YouTube

Eghrari-Logo

Long Island Elder Law & Estate Planning

  • Home
  • Who We Are
    • About Our Firm
    • Meet Our Team
  • Resources
    • Client Resources
      • Definitions
      • Docubank
      • Elder Law Resources
        • Brentwood Elder Law
        • Central Islip Elder Law
        • Commack Elder Law
        • Hauppage Elder Law
        • Smithtown Elder Law
      • Estate Planning Resources
        • Estate Planning Check Up
        • Estate and Gift Tax Figures
        • Estate Planning Techniques
        • Estate Planning Worksheet
        • FREE Estate Planning Seminars
        • Long Island Estate Planning Resources
      • New York Medicaid Resources
        • Medicaid Planning Worksheet
      • Nursing Home Resources
      • Probate Resources
        • Brentwood Probate
        • Central Islip Probate
        • Commack Probate
        • Hauppage Probate
        • Smithtown Probate
        • Suffolk County Probate Resources & Checklist
      • Presentations
      • Retirement Planning Checklist
      • Trust Administration Resources
    • Elder Law Reports
    • Frequently Asked Questions
      • Business Planning
      • Estate Planning
      • Families Without an Estate Plan
      • Incapacity Planning
      • LGBTQ Estate Planning
      • Medicaid Planning
      • Probate
      • Trust Administration
      • Trust Administration & Probate
      • Wills and Trusts
    • Reports
  • Estate Planning
    • Asset Protection & Business Planning
    • Estate and Gift Tax Figures
    • Estate Planning Services
    • Family-Owned Businesses
    • Incapacity Planning
    • Legacy Planning
    • SECURE Act
    • Special Needs Planning
    • Trust Administration & Probate
    • Young Families
  • Elder Law
    • Coping With Alzheimer’s
    • Emergency Medicaid & Nursing Home Planning
    • Hospice Care
    • Medicaid Planning
  • Areas We Serve
    • Long Island
    • Nassau County
      • Oyster Bay
    • Suffolk County
      • Brentwood
      • Central Islip
      • Commack
      • Hauppauge
      • Smithtown
  • Blog
  • Contact Us

Mobile Menu

  • Home
  • Who We Are
    • About Our Firm
    • Meet Our Team
  • Resources
    • Client Resources
      • Definitions
      • Docubank
      • Elder Law Resources
        • Brentwood Elder Law
        • Central Islip Elder Law
        • Commack Elder Law
        • Hauppage Elder Law
        • Smithtown Elder Law
      • Estate Planning Resources
        • Estate Planning Check Up
        • Estate and Gift Tax Figures
        • Estate Planning Techniques
        • Estate Planning Worksheet
        • FREE Estate Planning Seminars
        • Long Island Estate Planning Resources
      • New York Medicaid Resources
        • Medicaid Planning Worksheet
      • Nursing Home Resources
      • Probate Resources
        • Brentwood Probate
        • Central Islip Probate
        • Commack Probate
        • Hauppage Probate
        • Smithtown Probate
        • Suffolk County Probate Resources & Checklist
      • Presentations
      • Retirement Planning Checklist
      • Trust Administration Resources
    • Elder Law Reports
    • Frequently Asked Questions
      • Business Planning
      • Estate Planning
      • Families Without an Estate Plan
      • Incapacity Planning
      • LGBTQ Estate Planning
      • Medicaid Planning
      • Probate
      • Trust Administration
      • Trust Administration & Probate
      • Wills and Trusts
    • Reports
  • Estate Planning
    • Asset Protection & Business Planning
    • Estate and Gift Tax Figures
    • Estate Planning Services
    • Family-Owned Businesses
    • Incapacity Planning
    • Legacy Planning
    • SECURE Act
    • Special Needs Planning
    • Trust Administration & Probate
    • Young Families
  • Elder Law
    • Coping With Alzheimer’s
    • Emergency Medicaid & Nursing Home Planning
    • Hospice Care
    • Medicaid Planning
  • Areas We Serve
    • Long Island
    • Nassau County
      • Oyster Bay
    • Suffolk County
      • Brentwood
      • Central Islip
      • Commack
      • Hauppauge
      • Smithtown
  • Blog
  • Contact Us

Secure Act 2.0 Has Been Introduced

Secure Act 2.0 We recently shared a post about individual retirement accounts and inheritance planning. There has been a new development, and we will share it here to keep you up-to-date. But first, we will provide a review for those that may have missed the related entry.

Traditional Individual Retirement Accounts

A traditional IRA is funded with after-tax earnings, so you get tax breaks along the way. On the other side of the coin, when you make withdrawals from the account, they are subject to taxation.

The Internal Revenue Service wants to start collecting before you pass away, so you are required to take mandatory minimum distributions when you are 72 years of age. This age was 70.5 before the SECURE Act was passed at the end of 2019.

Prior to the enactment of this legislation, the contributions into traditional accounts had to come to an end when the account holder was 70.5 years of age. Now, there is no age restriction at all.

You can choose to take penalty-free withdrawals when you are 59.5 years old, and if you violate this rule, you pay a 10 percent penalty and the distributions are taxable. However, there are a few exceptions.

An account holder can take up to $10,000 out of the account to help finance a first home purchase without being penalized. Resources can be used to pay for school tuition or unpaid medical bills, and you can take distributions to pay health insurance premiums if you are unemployed.

Roth IRAs

The difference between a Roth individual retirement account and a traditional account is the timing of the taxation. You make contributions into a Roth account after you pay taxes on the income, so distributions are not taxed.

Since the taxes have already been paid, the IRS is satisfied, so there is no mandatory distribution age. If you choose to do so, you can let the assets continue to grow indefinitely without ever taking money out of the account.

There has never been any age limit when it comes to making contributions into a Roth individual retirement account. The guidelines are the same when it comes to the age at which you can take penalty free distributions, with one difference.

You can withdraw the contributions from a Roth individual retirement account at any time without being taxed, but the age threshold applies to distributions of the interest.

Rules for IRA Beneficiaries

The SECURE Act eliminated a very popular estate planning strategy that was especially useful for Roth individual retirement account beneficiaries.

Non-spouse beneficiaries of both types of accounts are required to take mandatory minimum distributions on an annual basis. The amount that must be distributed is based on the age of the beneficiary and the balance in the account. Younger beneficiaries would be able to take less than their older counterparts.

Estate planning attorneys advised clients to take only the minimum that was required by law for as long as possible. This is called the “stretch IRA” strategy, but the SECURE Act put an end to it. Now, all resources must be cleaned out of an inherited IRA within 10 years of the acquisition.

SECURE Act 2.0

Now that we have set the stage appropriately, we can get to the point of this post. A bipartisan piece of legislation that is being called SECURE Act 2.0 has been introduced into the United States House of Representatives.

It would make additional changes to the IRA guidelines. The one that is most eye-catching is an increase in the age at which traditional account holders must take required minimum distributions. Under a provision in this measure, it would go up to 75 years of age.

Employers would be required to enroll all eligible employees into their group retirement plans, and employees could opt out. The savers credit for low and middle income employees would be increased from $1000 to $1500, and the income threshold would be lowered.

This measure would allow employers to provide retirement account matches for employees that make qualified student loan payments. They would also raise the maximum IRA catch-up contribution for people that are 60 years old and older. It would go up to $10,000 for retirement plans and $5000 for SIMPLE IRAs.

Schedule a Consultation Today!

We are here to help if you are ready to work with an attorney to put an estate plan in place. You can send us a message to request a consultation appointment at our office in Smithtown, and we can be reached by phone at 631-265-0599.

 

  • Author
  • Recent Posts
Eghrari Wealth Training Law Firm
Mark S. Eghrari is an attorney in private practice in Smithtown, New York. He has been in practice since 1988. Mark S. Eghrari provides extensive estate and tax planning services to individuals and businesses. Mr. Eghrari’s primary focus is helping clients avoid probate, minimize or eliminate Federal and State Estate taxes and protect their assets from the high cost of nursing care, if they become ill.
Latest posts by Eghrari Wealth Training Law Firm (see all)
  • What You Need to Know about Medicaid’s “Look-Back” Rule - February 1, 2023
  • What You Need to Know about Elder Financial Exploitation - January 25, 2023
  • What Is an Asset Protection Trust? - January 18, 2023

About Eghrari Wealth Training Law Firm

Mark S. Eghrari is an attorney in private practice in Smithtown, New York. He has been in practice since 1988. Mark S. Eghrari provides extensive estate and tax planning services to individuals and businesses. Mr. Eghrari’s primary focus is helping clients avoid probate, minimize or eliminate Federal and State Estate taxes and protect their assets from the high cost of nursing care, if they become ill.

Previous Post: «estate administration Estate Administration Basics
Next Post: When Is an Irrevocable Trust Used? »

Primary Sidebar

Blog subscription

  • This field is for validation purposes and should be left unchanged.

Follow Us

  • Facebook
  • Instagram
  • LinkedIn
  • Twitter
  • YouTube

Where We Are

Eghrari Wealth Training Law Firm
50 Karl Avenue, Suite 202
Smithtown, NY 11787
Phone: (631) 265-0599
Fax: (631) 265-0754

See Larger Map
Get Directions

Office Hours

Monday9:00 AM - 5:00 PM
Tuesday9:00 AM - 5:00 PM
Wednesday9:00 AM - 5:00 PM
Thursday9:00 AM - 5:00 PM
Friday9:00 AM - 2:00 PM

Map

map for Eghrari Wealth Training Law Firm office

Footer

Office Location

Eghrari Wealth Training Law Firm
50 Karl Avenue, Suite 202
Smithtown, NY 11787
Phone: (631) 265-0599
Fax: (631) 265-0754

See Larger Map
Get Directions

Office Hours

Monday9:00 AM - 5:00 PM
Tuesday9:00 AM - 5:00 PM
Wednesday9:00 AM - 5:00 PM
Thursday9:00 AM - 5:00 PM
Friday9:00 AM - 2:00 PM

Sign Up for Our Newsletter

Sign up to get our free estate planning newsletter for all of our tips and resources

  • Disclaimer
  • Privacy Policy
  • Sitemap
  • Contact Us

Site Footer

ATTORNEY ADVERTISEMENT

Copyright © 2023 American Academy of Estate Planning Attorneys · All Rights Reserved