Tagged: Tax Planning

It’s RMD Time: It Ain’t 70 1/2 Anymore!

In 2020, President Trump signed the SECURE Act (Setting Every Community Up For Retirement Enhancement) into law as part of a far reaching “Further Consolidated Appropriations Act of 2020”. Although the SECURE Act was only signed into law about a year ago (December 2022), it’s mandates are already impacting U.S. small businesses and their employees alike.

What are RMDs (Required Minimum Distributions)?

The first word in this acronym stands out and is key: Required. Required Minimum Distributions (RMDs) are minimum amounts that IRA and retirement plan account owners generally must withdraw annually. The first RMD must be taken by April 1st of the year following your 73rd birthday. Let me explain let’s say you turn 73 years old on August 1, 2023. In this case, your initial RMD would be start by April 1st, 2024. In other words, your first RMD must be taken by April 1st of the year after you turn 73. As a side note, if you were born after 1960, then beginning in the year 2033, the SECURE 2.0 will extend the age at which RMDs must start to 75 years old. There are a lot of moving parts. But as you can see above, the schematic by Michael Kitces, explains the RMD details much better than just words alone.

There are a lot of detail to RMD planning. As an example, retirement plan account owners (like traditional IRAs) can put off taking their RMDs until the year in which they retire (unless they own 5%+ of the business underwriting the plan). Just know this, if you choose to delay taking your RMD, you’ll need to combine your RMDs (first and second) in the same year. That may create a problem by pushing you into a higher tax bracket. Talk to your trusted tax advisor to ensure you are following the guidelines and deadlines! Because, as with all things government-mandated, if you miss your RMD deadline, the penalties can be severe. Here are the IRS guidelines. 

A Reduced Penalty. Wait, What?

Yes, you read correctly. In the past, it was widely known in the planning community that RMD penalties were heavy. How steep? Well, under the prior rules, if a retiree overlooked or just flat-out missed the RMD deadline, they would be hit with a painful penalty of 50% of the amount not taken on time. Today, presently, that penalty has thankfully been reduced to 25%. And lessor yet, 10%, if you correct the oversight within two years.

By the way, even if you inherit a qualified (IRA, etc.) retirement account, it is still subject to an RMD. Note: Roth IRAs escape the RMD requirement in the account (IRA, etc.) owner’s lifetime, but get this: Your heirs will have to take RMDs). Nevertheless, overall, I like the changes and updates to RMDs. It allows hardworking Americans to keep their hard-earned money in retirement accounts for a longer period of time to earn more money for their future. And given the fact that we are all living longer, this can only help. -GW

At SEA Financial Hawaii, we do not provide tax, accounting, or legal advice. Clients should consult their own independent advisors as to any tax, accounting, or legal statements made herein. This material is being provided for informational or educational purposes only and does not take into account the investment objectives or financial situation of any client or prospective clients.

Bolster Your Retirement Accumulation through Tax Planning

Here is the premise I hang my hat on at The Wheeler Group LLC. And that is, tax planning can give a nice boost to your finances. We have all heard it before: Death & Taxes. With both there are strategies to live longer and legally pay less taxes. To be clear, tax planning is a complex and comprehensive process. And to muddy the waters even more, tax laws change frequently. Remember most recently in 2020? 

There are some common financial trends that apply to most of my clients. These come to mind: the desire to invest for retirement, the need to protect those they love and figuring out ways to legally pay less taxes now and in retirement. When it comes to your specific tax planning strategy, it is unique to you and your circumstances alone. No two plan are alike, period. Everyone has different financial problems, needs, desires and concerns (PNDC’s). My goal is to help you maximize your financial plan to set yourself up for financial success both now and into the future.

It is straightforward enough, the more money you save in taxes, the more you can reinvest in your family’s future goals. So, how can you do this? At The Wheeler Group LLC, we typically share a few suggestions with our clients. But one strategy reappears in the plans we create for clients. And that is, QCD’s.  Make the most of QCDs for charitable giving purposes.

My 21+ years of experience and more importantly, my passion to help kamaaina families put me in a unique position to help Hawaii residents set up their taxes in the most tax-efficient manner. Prior to meeting me, many of my clients thought about their taxes only around April 15th when the tax man cometh.  Preparing your taxes is different than planning for your taxes. We do not provide tax preparation services, rather we work with our clients throughout the year on intentional tax strategies. If this is something you want more information on, please reach out to me. We will share more applicable tax planning ideas. In the meantime, call (808-216-414seven), or email me (garrett@garrettwheeler.com) a request to receive your FREE RESOURCE, which summarizes everything you need to know about your taxes in 2022.

Let us discuss your unique situation and see if there is a good fit between what we do for our clients, and exactly what you are in search of from a trusted advisor. Let us start by gathering details and discussing ways to revamp your tax planning strategy. Sound good? If so, let’s set up a no-cost, no obligation appointment today. I cannot wait to help you keep more of your money working hard for you. 

Disclosures:

The Wheeler Group LLC is a registered investment advisor with offices in Honolulu, Hawaii. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.

Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by The Wheeler Group LLC unless a client service agreement is in place.

2014 Tax Data You Should Know

Many limitations and thresholds which are related to taxation change from year to year; some do not. From Estate, Gift, and Generation-Skipping Transfer (GST) Taxes, to Qualified Retirement Plan Limits, and Income Tax Rates, as well as Tax Exemptions, Standard Deductions and more. Below is a listing of the 2014 numbers for some key tax matters. Hope it can help you to be better prepared.
2014 Tax Data You Should Know

As always: The foregoing information regarding estate, charitable and/or business planning techniques is not intended to be tax, legal or investment advice and is provided for general educational purposes only. We do not provide tax or legal advice. You should consult with your tax and legal advisor regarding your individual situation.