On this week of Retirement You Radio, Brian Quaranta discusses the 4 key provisions of the newly introduced SECURE Act 2.0 and how it will affect your retirement.
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Radio Show Transcript
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Information provided is for illustrative purposes only and does not constitute investment tax or legal advice. Information has been obtained from sources that are deemed to be reliable, but their accuracy and completeness cannot be guaranteed. Neither Brian Quaranta nor his guests are liable for the usage of information discussed always consult with a qualified investment legal or tax professional before taking any action.
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Brian Quaranta 00:38
Secure Act 2.0. It’s currently being considered in Congress and most believe it’ll pass this year or next. So, what could it mean for those planning for retirement? On today’s show some ways the proposed change will impact retirement income back right here on Retirement You Radio
Steve 00:58
We are back on the Retirement You Radio increasing your financial IQ with BrianQ Im consumer advocate Steve. BrianQ, as always is Brian Quaranta. Brian is an author. He’s President and CEO of Secure Money Advisors, and we are talking Secure Act 2.0. Hey, Brian, how are you?
Brian Quaranta 01:15
Secure Act 2.0. I’m great, Steve, but the Secure Act thing. I mean, we hadn’t had a change in the IRA rules for gosh, decades here. Now all of a sudden, 2019. And now again, that we might see some changes.
Steve 01:31
I mean, this is one of the few times that we see the word bipartisan, and it actually means bipartisan. So, you I mean, again, I think that bodes well if for passage of this bill, but let’s dig into it, Brian and see, you know, for a lot of it on the surface, to me seems like a lot of good things.
Brian Quaranta 01:47
Yes, you know, it’s called the Secure act or Setting Every Community Up for Retirement Enhancement Act. It’s widely expected the bill will pass either this year or in 2020, to give it strong bipartisan support, just like you were saying, and nearly unanimous backing of the original secure acts. So, let’s take a look at some of the ways number one, the big one coming up is possibly that you can wait longer to take your arm ds.
Steve 02:15
So, I mean, again, that changed with the secure Act, the first version of it, and that went from 70 and a half to 72. What’s on what’s on the horizon?
Brian Quaranta 02:22
Well, the original Secure Act raised the age at which you must start taking required minimum distributions from a traditional IRAs and 401K’s just like you said, from age 70 and 1/2 to 72. Now the proposed legislation would again raise the age to begin taking RMDs this time, out until age 70. And that might happen over a 10-year period. So, over a 10 year period, we might see that RMD finally get up to about 75.
Steve 02:48
Okay, wow, that’s significant.
Brian Quaranta 02:51
It is that’s a big change. I mean, you’re talking about a half a decade there longer, that we have the wait before we have to take RMDs once it gets there. So, the age for RMDs would initially increase to age 73, starting January 1 2022, then age 74 on January of 2029. And then finally, it would be raised to age 75 on January of 2032.
Steve 03:15
Okay, so I mean, again. So, what that means is that if you don’t have to if you don’t need the money, I mean, you can let it continue to grow. I mean, you realize you’re still gonna have to pay taxes on all of that, but you can still let it grow for a lot longer. And that doesn’t seem to me to be a bad thing.
Brian Quaranta 03:30
Well, yeah, not only can you just, you know, continue to defer it and not have to worry about taking money out because the RMDs always became a problem for most people that didn’t need money from their investments, you were forced into taking that money out whether you wanted to or not, you’re at 70 and a half. And, you know, so now you’re gonna be able to wait till 75 before you’re forced to take that money out. But not only does that help you defer your money longer, but also it gives us a huge opportunity to actually do much more tax planning prior to age 75, meaning getting your money from taxable money over to tax free money. You know, you look at maybe somebody retired at the age of 65, that might not need to take money out of their retirement accounts is a great opportunity for them to over a 10-year period, create a conversion strategy to a Roth IRA to where they’re going from taxable money to tax free money.
Steve 04:24
Well, again, I think that’s great that you guys at secure money advisors are all thinking that far ahead, to be able to, I mean, again, that’s why we work with you. I mean, you’re being very proactive in this situation.
Brian Quaranta 04:35
Well, there’s five key areas, Steve, when it comes to planning for your retirement, number one, and most importantly, is your income. Because when the day comes that the paycheck stops the bills, taxes, and the money that you need to go out and do all the things that you want to do, those things aren’t going to stop. So, you have to have a plan a way to replace that paycheck. So that’s number one priority in retirement. Number two is making sure that when you do replace that paycheck that you do it in the most tax efficient way possible, and then of course three is making sure you have the right investments for is making sure you get a good health care plan and five is legacy and, and believe it or not, the RMDs. And the planning that takes place after retirement is a combination of good tax planning, but also good legacy planning. I mean, wouldn’t it be nice that by the time you hit age 75, when you’re forced into a distribution, you actually don’t have to take it because you’ve gotten all your money from taxable accounts to tax racy? Most people don’t know that. But when you move your money from taxable accounts to tax free accounts like Roth IRAs, you don’t even have to worry about this RMD. And then you can avoid potentially having to pay that 50% penalty for missing the RMD. Which, by the way, yeah, go ahead. I know what you’re gonna say.
Steve 05:44
Well, no, but they’re making a change there, too. That seems pretty generous on the part of the IRS.
Brian Quaranta 05:49
It’s probably one of the most generous things I’ve seen in a while from the IRS. And that is, they’re taking the 50% penalty for missing the RMD. And for those that you don’t know, though, this, if you’re required to take an RMD, let’s say, you’re supposed to take $10,000 out this year, and you fail to do that. It’s a 50% penalty on the money that you should have taken. So, if you’re required to take $10,000 out, that’s a $5,000 penalty that you’re going to pay. Now they’re saying that they’re going to reduce it to 25% if the mistake is corrected, and then they would reduce it. If I think even a further reduce it to 10%. Once it was corrected, and you paid it right, right. Yeah, so that’s pretty good.
Steve 06:31
That’s a pretty good thing, folks. Again, I think it’s important to connect with an advisor like Brian and his team at Secure Money Advisors to stay on the front end of all of this, and that’s what they do with secure money advisors. Brian, why don’t we invite folks to call get on your calendar.
Brian Quaranta 06:45
See, this is why we offer the right track retirement consultation, right. It’s no cost, no obligation to you. And I’ve seen other people charge up to $1,000 or more for similar features or offers that we’re going to give away at this review at no cost. So, if you’re one of the next 10 callers, what this is going to do is it’s literally going to take the mystery out of financial planning, we’re going to give you a roadmap and help you map out where you are right now and where you need to go. We’ll do that by understanding what your goals are with your money understanding what you need your money to do for you whether you need to take income, grow the money, preserve it, leave a legacy, whatever it might be. And then we can run a report through it and analysis to determine any good tax planning strategies and a good income planning strategies. Matter of fact, we can build proven income strategies, utilizing techniques that could literally turbocharge your retirement income and take the worry out of living too long in retirement. And in short, we’re really going to take the guesswork out of financial planning. So again, folks, you got to do your part though, you got to pick up the phone, call and schedule a right track retirement meeting with our team today. Again, we’re gonna go over five key areas income taxes, investments, health care and legacy planning. But again, do your part pick up the phone call in today? That’s a comprehensive financial review that we’re gonna give away complimentary with no obligation.
Steve 08:06
Hey, that sounds fantastic, folks, it’s a great opportunity to sit down with Brian and his team and get that financial roadmap put together, Brian can take this complex financial world I mean, again, from you know, secure act 2.0 Social Security, there’s a lot of complicated pieces of the puzzle, Brian can straighten it all out, make it clear, make it easy to understand, it’s your chance to get a true practical financial review and it starts with that phone call 800-656-8616. You heard Brian the next 10 callers are going to get that comprehensive financial review you will see where you are today. But more importantly, you’ll find you’ve got a roadmap that can help get you to where you need to be when it comes to retirement. 800-656-8616 again 800-656-8616
Brian Quaranta 08:53
When we come back more on the secure act right here on Retirement You Radio
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Steve 09:40
We are back on Retirement You Radio, Increase your financial IQ with BrianQ, Im consumer advocate Steve. Brian Quaranta is here. Brian is president of Secure Money Advisors president and CEO of secure money advisors and you’ve been doing this a good long while better than 20 years helping folks getting to and through retirement and Brian, you know you said at the beginning Heading to the last segment that this is, these are some of the most, these are some of the biggest changes to retirement planning in years. And we talked about the secure act that passed in 2019. Now we’re looking at secure act 2.0. And the so last time, we talked about the RMDs. And all those are changing. So, what else is happening with the secure act? 2.0? What else can we look forward to?
Brian Quaranta 10:24
Well, some of the other things that are happening here are things that I really liked, because it really is going to help people save more for retirement. So, you know, your employer could auto enroll you into your retirement savings plan, the legislation, it would require employers to automatically enroll eligible workers into 401K’s or 403B plans at a savings rate of 3% of their salary
Steve 10:48
Okay, so, it would be an automatic thing. So, in other words, yeah, welcome to automatically, you know, a company XYZ, you are automatically enrolled in our 401k. It’s 3%.
Brian Quaranta 10:58
That’s right. Okay. That seems good. Yeah, enrolled workers, they’re also saying maybe contributions rates would automatically increase by 1%, until their contribution reaches 10%. So, this is, again, this is all better ways for people to save more money in retirement. And these changes needed to take place, Steve, because, you know, the challenge that everybody’s going to have in retirement 85 to 90% of the people retiring, and even more, you know, if you, if you look at the people that are that, you know, are going to retire 20 years from now, 30 years from now, the 100% of those people, you know, I shouldn’t say 100%, but close to 100% of those people aren’t going to have pensions right now, we’ve got 85 to 90% of the people without pensions. So, you know, the secure act, making changes to the savings rate, and how much we can contribute to plans is going to make a big difference for people as they continue to accumulate for retirement. Because remember, folks, you’re going to be responsible for creating your own pension, as most people are right now. And that’s one of the things that we do here at secure money advisors, most people focus on the accumulation phase retirement, we focus on the distribution phase of retirement, and those are completely different strategies and techniques in the accumulation phase. Most people, it’s pretty simple to create a portfolio around the accumulation stage, you know, and most people, you know, have gotten the fundamentals that they need from, you know, talking to an advisor about proper allocation or, or maybe just understanding from, you know, a planning meeting from their 401k provider that this is the proper way to allocate and you want to think about, you know, diversifying and dollar cost averaging things along those lines. And those are good fundamentals. But those fundamentals don’t carry over into the distribution phase, because the distribution phase has a whole different set of rules. And that’s where we come in at secure money advisors for 20 years, that’s all I’ve been focused on is the distribution phase, where we’ve got to be concerned about tax planning, getting from tax to tax free, we got to be concerned about how we’re going to handle the RMDs whether you whether you’re taking money out now or you’re going to start taking it when the RMD comes. Also, what happens if you lose a spouse? So, these are really big things that take place during the distribution phase, and more importantly, how to build a distribution plan if you’re going to need income without the risk of running out of money, too.
Steve 13:15
Sure. And so, one of the other things, so auto enrollment, and but I think you did mention that that you can opt out if you want it to in other words, if not, you could. But again, it’s an automatic thing, unless you say otherwise. So, I liked that I liked the fact that they’re upping the bigger the catch-up contribution. I think that’s a good thing.
Brian Quaranta 13:35
Yeah, under the proposed bill, workers between ages 62 and 64, would be able to contribute even more to these accounts for 401Ks and 403B plans would be able to contribute an extra $10,000. That’s up from about $6,500. I mean, that’s a nice, significant, yeah, it’s a nice increase, it’s about a 75% increase over what they’ve been able to put in, you know, so, so seeing contribution, catch up, contribution limits go up. And I still think we need more there with contribution amounts. I mean, you know, you’re really asking people to basically be responsible for their own retirement and creating the income that they’re going to need in retirement, and you’re putting that in their hands, then we need to see even greater contribution limits to this. Because, you know, at the end of the day, if you’ve been, you know, a family and you’ve got children, and you’ve been putting your kids through school, and you know, the time you reach your peak earning years, maybe you finally have that school loan paid off, maybe you finally have the mortgage paid off. Now, you have an opportunity in five to 10 years to do some serious savings, and a lot of the 401 k’s and the IRAs just don’t allow for a massive amount of savings in a short period of time. So, I’d like to see those contribution limits go up even more, but this is a step in the right direction, Steve. Sure.
Steve 14:49
And I mean, even with that, you know, I liked the fact that tell me how they the for the catchup contributions for over 50 are changed before There was a limit on how much they could change that now it’s going to be tied to what?
Brian Quaranta 15:04
Well, yeah, the proposal also calls for the IRA catchup limits for those who are over 50 to be indexed to inflation. Oh, starting in 2023. So that’s so that’s a big change. Yeah, that’s a, that’s a good change. But again, this is why it’s secure money advisors, we offer the opportunity for you to come in and take advantage of a complimentary consultation. And it’s with the right track retirement system that we’ve created here at secure money advisors to do exactly that, to make sure that you’re on the right track, and you are doing the right things. Remember, there’s a difference between the accumulation phase and distribution phase of life, most of you that are listening to this show might already be in that distribution phase. And you might be using accumulation strategies during the distribution phase. And there’s certain techniques and strategies that change once you shift gears. Most people understand the fundamentals of accumulation, but they haven’t been taught the proper fundamentals of distribution. And that’s what we’re going to do when you come in at secure money advisors. I’ve seen other people charge up to $1,000 or more for similar features or offers that we’re going to give away at no cost, no obligation. And it’s truly going to take the mystery out of financial planning for you help you map out where you are now and where you need to go. We can run a free report, see what you’re currently paying for your portfolio, run a tax analysis, see what we can do as far as tax savings, show you how to create a customized income plan, utilizing proven strategies and techniques, which could turbocharged your retirement income. Most importantly, we take the guesswork out of it, we make it simple, easy to understand. And that’s what gives you the confidence to get through retirement and enjoy retirement. So again, for the next 10 callers. That’s a comprehensive financial review. We’re gonna give away complimentary with no obligation.
Steve 16:40
Hey, that sounds fantastic. Folks, take advantage of what Brian is offering here today. The next 10 callers 800-656-8616 be able to sit down with Brian and his team and really put that financial roadmap together once and for all. Yes, it can get pretty complicated. The good news is Brian is on you know, again, well informed, especially on these changes that are coming. He is there for you to help take that complex financial world and turn it into something that really just makes sense. It’s a true practical financial review. And it starts with that phone call 800-656-8616. You heard Brian the next 10 callers are going to get that comprehensive financial review plus all the extras that he talked about the social security analysis, the portfolio X ray, all of that is included. no cost, no obligation. It’s just an opportunity to sit down and get a roadmap that can help get you to where you need to be when it comes to retirement. It’s a phone call away at 800-656-8616 10 callers right now. 800-656-8616 and Brian as always, Boy, these segments go really quick. Tell you what, let’s come right back and continue the conversation.
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Steve 18:35
Welcome back, everybody. I’m consumer advocate Steve, the Brian Quaranta is here, and this is Retirement You Radio increasing your financial IQ with BrianQ. We’re gonna jump into some questions at this point. And so, you talked about early on you talked about you still got some of the seminars going on what you do, and it’s like a wine tasting or something.
Brian Quaranta 18:56
Yeah. Well, we try to get out to the wineries as much as we can. Usually. Sorry, well, you know, hey, you know, it makes it makes, you know, talk and financial stuff a little bit nicer, right. Yeah, of course. Absolutely. Absolutely. But yeah, well, I mean, you know, at www.securemoneyadvisors.com. On our events tab, we got a lot of educational events going on right now. You can go there and find out where we’re going to be next. And, you know, sign up, come join us, we go over a lot of topics. It’s really nice at the events because we do a real one on one type of event where people get to ask very specific questions, and we dive deep with them right then and there. And people get a lot out of it. You know, it’s not a canned it’s not a canned presentation. You know, when I started doing these 15 years ago, I was the only guy out there doing it. I think now, you know, most people could probably go to a seminar, you know, a financial advisor, you know, every night of the week if they wanted to, but what makes ours different is we’re actually getting real work done. We’re not just sitting up there and, you know, regurgitating a presentation that we do, you know, 10 times a month. I mean, we’re really engaging in finding out what people’s concerns are. Are and trying to help them make some sense of it prior to them leaving. So, it’s a real benefit. And you can go again to www.securemoneyadvisors.com and fill out one of our intake forms on the on the web and then scheduled to come in and meet with us directly or just sign up to come to one of the events.
Steve 20:17
I like the sound of that. And folks, so let’s jump into a couple of these questions here. I like it. Arthur has checked in, he wrote us and says, I’m 67 years old, I intend to take Social Security benefits at age 70, my wife turned 65, in June of this year, she doesn’t have the minimum 40 credits of work to get her own Social Security retirement benefits when she turned 65. Can she claim spousal benefits? How will they be calculated if she claimed spousal benefits? Will that have any effect on my benefits when I claim at 70?
Brian Quaranta 20:51
As long as Arthur turns his social security on his wife can turn hers on and a half but, but you know, if she doesn’t have any credits, and she’s been a homemaker, then she’s got to wait for him to turn it on. So, he used to have these like file and suspend strategies where the spouse could turn it on, but the husband didn’t. And now, you know, if you’re if you don’t have enough work credits, and you’re gonna be relying on your spouse’s, you gotta wait till your spouse turns it on. But yes, you’d be entitled to half is, which is nice. And this all comes into, you know, the strategies of when to take sole security. Now, I’m not a big fan of waiting until 70. Because your breakeven isn’t until age, you know, 80 to 83, somewhere around there, you know, unless you know that you got some longevity on your side of the family or whatever. But, you know, what we found in retirement planning is that, you know, for every dollar we get in Social Security, it’s less money that we’ve got to take from the retirement accounts, it actually leverages your dollars, meaning your retirement savings dollars much better, and allows you to accumulate a larger pot where preserve that pot for later on in life, rather than spending it down by delaying Social Security. Remember, Social Security is only a benefit that’s guaranteed of your living, you know, and for most people that delay, you’re missing out on hundreds of 1000s of dollars that you could have got throughout your 60s when you’re actually healthy and actually want to be active and go and travel and do what the things you want to do. And instead, you’re using your own money to do that and depleting it at a much faster rate. So, I’m just not a big fan of the delay in strategy. Although some people like to talk about it mathematically, you know, it does provide the largest benefit. But I think in practice, for a lot of people, it just makes better sense earlier than later.
Steve 22:24
You know, there are a lot of different strategies for couples to claim Social Security. And it’s and the beauty of what you do is you give us some options and let us choose.
Brian Quaranta 22:34
Yeah, we want to maximize the accumulated dollars that the individuals have saved over their lifetime. We want to use any subsidies that we can get from the government sooner than later to help preserve the dollars you’ve worked your entire life for.
Steve 22:46
All right, absolutely. All right. Well, Arthur, if you want to have that conversation, give Brian a call at 800-656-8616. Let’s check in with Sheila, she says I have most of my money in a traditional IRA. I’m 66 years old and still working. Is it better to convert to a Roth IRA and invest? Am I able to transfer the stocks in the traditional IRA? Or do I have to sell them?
Brian Quaranta 23:09
It’s a great question. She’ll I mean, you know, I’m a big fan of converting, as you guys know, going from taxable to tax-free, certainly a conversion strategy would be beneficial for her, but I don’t know her tax situation. So, we don’t know exactly how beneficial it would be. But in theory, her going from taxable money to tax-free money can definitely benefit her in retirement and you want to work with a financial planner to figure out whether or not that would make sense to you. But certainly, converting some of that money right now and getting it into a tax-free account and letting it grow tax-free so that your distributions are tax-free in the future is much more advantageous for you in retirement.
Steve 23:45
Sounds good. And again, 800-656-8616. Let’s see, we got time for one more. And it’s another Roth-related question. Joel says this year I plan to maximize my contribution to my 401 K, including the catchup, can I still contribute to a Roth?
Brian Quaranta 24:01
Again, depending you potentially good, you know, depending on what your income is. So, it’s a good possibility. If you go to the if you just type in IRS income thresholds for Roth IRAs, you’ll see if you qualify to be able to do that. So, it’s certainly something I would look into if you’re if you’re eligible to do it.
Steve 24:23
All right, fair enough. Well, and on that note, we need to wrap it up here, Brian, what a great show lots of great information. Let’s go ahead and invite folks to call one more time.
Brian Quaranta 24:31
Yeah, these are all great questions. And this is why people always want to know the number one thing they always want to know is: Am I on the right track? Am I doing the right things? Folks? If you weren’t on the right track? When would you want to know that? You know, if someone said to me, Brian, you’re not on the right track, and you’re not doing the right things I would want to know now not later, because I know the sooner I can start making changes and the sooner I can start planning, the better. My plan is going to be 5, 10, 15 years down the road and I encourage you to do the same. Take advantage of the Right Track Retirement meeting that we’ve put together for you. It really is going to help you determine whether or not you’re in need of a full-blown financial plan. It’s going to help you understand the five key areas of retirement planning, which is income, taxes, investments, health care and legacy planning. Now I’ve seen people charge up to $1,000 or more for similar features or offers, we’re going to do this complimentary for the next 10 callers who call in right now, it truly is going to take the mystery out of financial planning, it’s going to help you map out where you are right now. And where you need to go giving you turn by turn directions of how to get there. We can look at the fees that you’re paying. We can look at tax strategies, we can show you how to develop an income plan so that you don’t run out of money. But again, you’ve got to do your part. We’re going to help you take all the guesswork out of it for the next 10 callers. Steve, that’s a comprehensive Right Track Financial Review that we’re going to give away complimentary with no obligation.
Steve 25:49
800-656-8616 The next 10 callers are going to get that comprehensive financial review showing you where you are today, of course, but more importantly, like Brian just said, you are going to get a roadmap that shows you are on the right track to get to retirement 800-656-8616 Again, 800-656-8616 Brian, as always, a pleasure. Lots of great information. And I was fun just to hang out and talk and talk about retirement.
Brian Quaranta 26:15
Absolutely, Steve and thank you to the listeners and join us again at one of our educational events. Go to www.securemoneyadvisors.com Go to the events tab. You can also listen to our radio shows there you can see our TV shows and you can sign up for one of our events and until next week. Have a great weekend. Enjoy the rest of your time. And we’ll see you again right here next week on Retirement You Radio.
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Re information provided is for illustrative purposes only and does not constitute investment tax or legal advice information has been obtained from sources that are deemed to be reliable, but their accuracy and completeness cannot be guaranteed. Neither Brian Quaranta nor his guests are liable for the usage of information discuss. Always consult with a qualified investment legal or tax professional before taking any action.
