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Ask Ed: Financial Planning Questions And Answers



Ask Ed: Financial Planning Questions And Answers

Once I read Ed Mahaffy’s book titled “How To Select A Financial Advisor: The Least You Should Know”, interviewed him, reviewed his video library, I knew we had the right person for this special financial planning series. On Fridays, TaxConnections presents questions often asked of a Financial Planner.

Dear Ed: Financial Planning Questions  

Question: The SECURE Act of December 2019 raised the beginning age for RMDs from 70 1/2 to 72. When should households with higher incomes consider ROth conversions?

Answer: In their first few years of retirement before the temporarily lower tax rates expire at the end of 2025.

Question: The SECURE Act creates problems for IRA trusts, what problems should I be aware of if I have an IRA trust?

Answer: Before the SECURE Act, language in an IRA trust might restrict access to the beneficiary to annual RMDs from the IRA. The intent was to stretch the payments to mitigate taxes however now the maximum stretch period is only ten years. This means there is no RMD due in years 1-9, but distributions must be taken by the end of year 10, after the death of the owner.  This may sense with a Roth, but it can penalize beneficiaries of traditional traditional IRAs who, although they get ten years of tax deferral, will be forced to take a large taxable distribution possibly resulting in higher taxes.

Question: What is one estate planning strategy to consider now that the stretch IRA has been removed?

Answer: Life insurance death benefits can be received free of income tax as well as estate tax free. Proceeds can be used to offset the higher tax liability caused by the  the new 10-year distribution period.

Contact Ed Mahaffy

(How To Select A Financial Advisor – Ed Mahaffy)

Request Copy of eBook In Its Entirety With Charts

Ed Mahaffy

Our first priority is helping you take care of yourself and your family. We want to learn more about your personal situation, identify your dreams and goals, and understand your tolerance for risk. Long-term relationships that encourage open and honest communication have been the cornerstone of my foundation of success.

Our approach is cost-effective and tax-efficient. As an independent investment advisor, we can offer you a personalized financial strategy, not a generic investment program. Your individual portfolio will be based on your unique situation, your values, your preferences and your goals. It will be designed to account for change, in the markets and in your circumstances.

As your professional partner, we’ll work hard to earn your trust and confidence, and provide the advice and service you deserve. Send me a note regarding any questions you may have about any particular investment concepts or products. We’ll get back to you quickly with a thoughtful answer.

Request A Copy of “How To Select A Financial Advisor” at

https://www.clientfirstwm.com/download-my-book

You can reach me directly at ed@clientfirstwm.com or call 501.603.0406

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