Broker Check



| January 18, 2022

Refer to any news media and the headlines are teeming with news about COVID…and has been for 2 years. It is no wonder that important information about other areas of interest is getting buried. After placing a few phone calls regarding various legislation that passed at the end of 2019, I thought it might be good to revisit some important issues that may impact your planning.

2019—I will mention it only because the Secure Act was passed in December and became effective in our 2-year window. The start of 2022 might be a good time to go back and reread a piece we penned called The Secure Act-Is it Really a Good Thing? To highlight a few issues:

  1. You can still open a retirement plan for last year and make contributions until you file your tax return! This might give you some rearview planning options for 2021 if you think you are going to owe a lot in taxes.
  2. It bumped the Required Minimum Distribution to age to 72. This is the age you are required to take withdrawals from your IRAs and possibly other retirement accounts. And yes, you will probably owe tax on the distributions.
  3. It dropped the age limitation to contribute to your IRAs. You can do this as long as you have earned income and comply with a few other caveats.
  4. The IRS will be getting their money earlier. When you die with a retirement plan and it goes to your children, they will no longer be able to stretch payments over their lifetime; hence, keeping the tax bill low. They will have 10 years to get the proceeds out and pay the tax on it. The thing to remember here is our progressive tax system. The higher your income is in any given year, the higher your tax rate goes. This could hurt in a big way. In one analysis we ran, the children would lose over 75% of their parent’s IRA due to the new rules.

2020—We started the year looking for 20/20 Vision. How do you remove the fog in your life so you can see the finish line? This was a must-read, and my bet is your life got railroaded by this thing called COVID. We all want 20/20 Vision, so do yourself a favor and do some reading. These were the select few that could help you gain it:

Thankfully, nothing notable was made permanent in 2020 – except perhaps COVID and related issues.

2021—Tax changes and increases appear to be inevitable. Yes, the Build Back Better Plan appears to be dead in the water, but that doesn’t mean change isn’t coming. If I were you, I would consider this the time to get your house in order. You were advised to start in 2016, reminded in 2017, 2018 and 2019, warned the change is inevitable in 2020 and 2021…and here we are. Be mindful that not all changes will require a legislative change. Almost every piece of the tax reform is set to expire over the next few years.  

If you are selling something, have a lot of income, have a big retirement account, or have a large estate; take heed.  Remember that “Opportunities are like sunrises. If you wait too long, you miss them.” -William Arthur Ward  

And...if you still need motivation, take a look at these articles as we provided updates from proposed legislation throughout 2021:

One of my favorite and often repeated quotes is by Warren Buffet - “Someone is sitting in the shade today because someone planted a tree a long time ago” - applies to more than just the investment world. You might be simply educating yourself and saving your pennies so your dollars will be there. Or perhaps you are teaching your children to not take what they see for face value so they can fend for themselves. Or perhaps you are setting up a legacy for generations to come. Whatever future you are looking towards, I hope you are planting and nurturing that tree. The shade will be well worth it.