Among the best stories from Retirement Daily for Feb. 10 - 14: Avoiding tax traps in the new SECURE act, avoiding online romance scams, and - there's no way to avoid it - we had a lot of Social Security columns this week.
Adviser April Reed Crews writes in a guest column this week, "Financial advisers and investors alike began 2020 with a list of questions on the Setting Every Community Up for Retirement Enhancement Act, or the SECURE Act, attempting to discern the advantages and disadvantages of the legislation and what actions may be required both to protect investors and to maximize opportunities presented by the act.
"It is estimated that the SECURE Act will generate nearly $16 billion in additional tax revenue over the next decade, but there are strategies that can be implemented now to help reduce the tax burden that will be felt by both retirement account owners and their beneficiaries."
Read more about the changes related to tax rules and retirement account beneficiary issues in Potential Tax Traps of the SECURE Act.
Also related to the SECURE Act:
Question: I understand that those who have turned 70½ in the first half of 2019 will have to take, because of the provisions in the SECURE Act, their first required minimum distribution (RMD) by April 1, 2020. Is it safe to say that under the new rules that those who have turned 70½ in the second half of 2019 would have until April 1, 2021, to take their first RMD?
Now, as we head into this long weekend book-ended by Valentine's Day and Presidents' Day, we'd also like to highlight a column this week by Jeanette Pavini. Don't lose your heart or your cash to an online romance scam, she warns in Broken Hearts and Empty Wallets.
Finally, we didn't plan it this way. We just had a lot of questions, contributions and news related to Social Security.
Adviser Timothy Kenney puts the future security of Social Security into perspective in his column, Will Social Security Be There When I Retire? He writes: "One of the great parts about my job is getting to hear how different everyone's life story is. From their upbringing, to their goals and personal situations, everybody is different. But if there's one part of the financial planning process where virtually everyone has the same outlook, it's Social Security. When it comes time to discuss potential sources of retirement income and I mention Social Security, clients usually say something to the effect of, 'Well, we're out of luck there aren't we?'
"It's a reasonable reaction. According to the 2019 Social Security trustees report, assuming no further action, the Social Security trust fund reserves will be depleted in 2035. For those of us planning for retirement in the next 10+ years that is troubling. After a lifetime of paying into the system, some of us may find ourselves retiring right as the well runs dry. Let's take a quick look at the system today, focus on what changes can be implemented to prolong the program, and how you should plan for the future."
More from Retirement Daily:
Question: I turned 70 in January and claimed Social Security. I'm still working. I read that if I combine my 2019 gross income of approximately $36,600 plus one-half of my annual Social Security ($13,690), I will need to pay taxes on this income, which I believe is 85%. I am wondering if I should put part of my Social Security check into a Roth IRA and/or increase my Social Security tax withholding?
When it comes to Social Security, there are plenty of quirky rules. Bill Reichenstein highlights two worth knowing.
Question: I am 63 and my wife is 58. I was the higher earner. Right now, my plan is to wait until age 70 to apply for my Social Security benefits. If I should die shortly after claiming Social Security at age 70, what will my surviving spouse receive?