Most Americans know the legacy they want to leave, but few take even the minimal steps to ensure that legacy. A legacy is what you leave behind, especially to heirs and loved ones. A legacy can include things, such as money, property and other tangible items. Some of these items might have monetary value while others have mostly emotional value.
A legacy also can include the intangible, such as values, life lessons and final wishes and instructions. Americans ages 55 and older generally agree on the legacies they want to leave.
Read more: Bob Carlson's - Protect Your Legacy by Taking the Steps Most People Don’t
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Read more: Bob Carlson's - My 2021 Strategy for the Long-Term Care (LTC) Crisis
We’re nearing a critical time for many Individual Retirement Account (IRA) owners. Advance IRA planning will be imperative if you want to maximize the after-tax value of your IRA for heirs and avoid the new tax burden Congress has in mind.
As I explained last month, despite the deadlock and division in Washington, the Setting Every Community Up for Retirement Enhancement (SECURE) act moved through the House of Representatives by a vote of 417 to 3 in May. A version of it is likely to pass the Senate and become law later this year. The SECURE Act and its Senate counterpart have a number of provisions designed to expand retirement savings opportunities and would delay required minimum distributions (RMDs).
To make up for the lost tax revenue, the SECURE Act and the Senate version would end the Stretch IRA. The Stretch IRA is a strategy in which children who inherit an IRA make maximum use of the tax code to minimize distributions for years. In many cases, the RMDs are less than the investment return of the IRA, so the IRA not only lasts for decades but increases in value. Under the SECURE Act, beneficiaries (other than minor children and a few other exceptions) would have to distribute and pay taxes on an inherited IRA within 10 years, even Roth IRAs.
Read more: Bob Carlson's - Congress Plans to Kill the Stretch IRA, But You Can Do An End-Around
My favorite long-term care protection plan is improved and attractive to more people than before. You have more options than ever to help pay for future long-term care, and these newer options are significantly more appealing and rewarding than traditional long-term care insurance.
I’ve covered in the past the many troubles in traditional long-term care insurance (LTCI). Most insurers exited the market. Many of the remaining insurers continue to raise premiums on existing policyholders.
Read more: Bob Carlson's - An Answer To Today’s Long-Term Care Crisis
There long has been a group in Congress determined to end the Stretch IRA, and this year they seem intent to have their way. I’ve reported in the past few years that many in Washington were targeting the Stretch IRA. The Obama administration called for an end to this valuable estate planning tool in its annual budgets. A bipartisan group in Congress agreed, and it appears that group is growing.
Their latest vehicles are two retirement bills working their way through Congress. The version in the House of Representatives is called “Setting Every Community Up for Retirement Enhancement” (the SECURE Act). The Senate version is titled “Retirement Enhancement and Savings Act” (RESA). The bills have a number of provisions, many beneficial to retirees and pre-retirees.
One goal is to give more workers, especially small business employees, access to employer retirement plans. Small businesses would receive a credit of up to $500 annually to defray the start-up costs of some retirement plans. Also, long-time part-time workers would be allowed to contribute to their employers’ plans.