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TOP TIPS – How to Handle your Stretch IRA in the Light of SECURE

The stretch Individual Retirement Account (IRA) has long been used as an efficient estate planning strategy. However, with the passing into law of the new Setting Every Community Up for Retirement Enhancement (SECURE) Act, beneficiaries will no longer be able to stretch out required minimum distributions over the course of their lifetime.

Instead, beneficiaries who are not spouses must now exhaust their inherited IRAs within a decade – other exempt parties include under 18s and beneficiaries with certain disabilities. Quite simply, what was once a winning estate planning tool has now become a conundrum.

So, how do you solve this puzzle in order to serve the best interests of beneficiaries while simultaneously reducing exposure to any unnecessary tax burden?

NEWS WRAP – Tax Filing Season is Upon Us

Tax filing seasons got underway on 27 January, the date on which the Internal Revenue Service began to accept the first of 150 million anticipated returns.

The due date for tax payments is 15 April*, with interest starting to accrue on any tax owed after this date.

Over recent years many tax filers have become accustomed to filing returns digitally – for many this represents the most efficient way of managing the process – and 2020 is likely to be no different, with a record number of digital tax filers expected. However, this comes despite the problems of the Free File program — a partnership between the IRS and private-sector tax-return software companies.

NEWS WRAP – Brokerage Merger Challenge Dismissed on Technical Grounds

The antitrust lawsuit against the merger of investment brokers Charles Schwab and TD Ameritrade has been dismissed by the U.S. District Court for the Southern District of New York.

However, the decision is unlikely to be the end of the matter as the dismissal was made on procedural grounds with the court ruling that the plaintiff, BlackCrown Inc., is a corporate entity and therefore cannot represent itself. The judge cited the 1993 case of Rowland v. California Men’s Colony and the 1997 decision reached in Pridgen v. Anresen as forming the basis for the court’s decision.

TOP TIPS – Wealth Management Resolutions for a New Decade

The turn of the new decade is the perfect time to review your wealth management strategy, including your retirement accounts, tax and estate plans and, of course, the status and suitability of your cross-border assets.

Here we provide our top tips for getting your wealth management in order for the 2020s.

NEWS WRAP – SECURE Boon to Retirement Planning but with Estate Planning Implications

On 20 December 2019, President Trump signed the Setting Every Community Up for Retirement Enhancement (SECURE) Act into law*. The bill had already passed the House in a resounding 417-3 vote, and the reasons why it had near-unanimous bi-partisan support are clear.

SECURE promises to herald new ways of thinking about, and preparing for, retirement as the US moves into the 2020s. The Act seeks to enhance the coverage of qualified plan rules, not least by allowing smaller employers to collaborate so they can offer their staff 401(k) plans and, in a move that answers a frequent criticism, by giving long-standing part-time workers access to 401(k) plans.

NEWS WRAP – Study Suggests 401(k) System Woefully Inadequate for Most

All being well, when an individual reaches retirement they will have enough cashflow to continue their pre-retirement lifestyle; however, a new study indicates that many in the US will be unable to meet even their basic spending needs once they stop working.

The new report, from the Economic Policy Institute (EPI), finds that despite accruing around three decades worth of savings into their 401(k) accounts, most retirement savers between the ages of 56 and 61 have a median account balance of $21,000.*

It would be tempting to think that younger people were better prepared, yet the same study reveals that the first generation of millennials are just as poorly, if not more poorly, prepared for retirement, with a median 401(k) saving of approximately $1,000.*

TOP TIPS – Crunch the Social Security Numbers and Play the Long Game

There is a lot of debate, and conflicting advice, regarding the age at which it is best to take Social Security benefits.

Of course, if you are 62 and have no other source of income, the answer is taken out of your hands: you will probably need to claim.

However, for those people approaching retirement age who have made financial plans for the future, there is the liberty of choice. So, what are your options, and what should you do? Here are our Top Tips:

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