Retiring should be easy. After all, you’ve spent a lifetime working to get to this point and so it seems only fair that you shouldn’t have to work more in order to finally retire. Unfortunately, as you, yourself, have likely pronounced on more than one occasion, “life isn’t always fair.” Retiring does take work, but it doesn’t need to be overwhelming if you approach the task with a planning mindset.

A retirement plan starts with thinking about your goals and how long you have to meet them. From there, you need to look at the different types of retirement accounts and determine which best suits your aims. As you save money, you’ll need to develop an investment strategy and, finally, you need to anticipate (and work to minimize) the tax bill that awaits when you finally begin withdrawing from those accounts which reward contributions with tax deductions. Sound like a lot? If you had to do it all alone, it would be. Luckily, wealth and estate planning attorneys exist for the precise purpose of lessening the burden and ensuring you a smooth transition to your golden years. However, their help is only as good as the information you provide them.

Hot Topics to Address with Your Attorney

1. Beneficiaries

Naturally, caring for loved ones is central to many peoples’ estate plan. Your attorney can best help you with this goal when they have a complete picture of who your beneficiaries are and how you wish to care for them. If there are people for whom you hope to provide for throughout their entire life or if you intend to leave behind sizeable financial assets that you wish to see dispersed over a long period, you must let your attorney know. Why? Because the recently-passed SECURE Act drastically changes the strategies available for achieving such aims.

2. IRA Contributions and Withdrawals 

The SECURE Act has not only eliminated the stretch IRA, it has also dialed up the age until which you can contribute to a traditional IRA and pushed the limit on when required minimum distributions (RMDs) kick in. In concrete terms, this means you need not begin withdrawing from your IRA until 72 years of age instead of the previous 70½ and that you can now continue contributing to your IRA for as long as you are working. Naturally, these changes mean increased tax flexibility as IRA earnings do not count against your income until you withdraw them from the account. Whether you already have a retirement plan or are in the process of building one, you’ll want to chat about these adjustments with your attorney as they are sure to impact your strategy.

3. The CARES Act

While addressing RMDs, it would be remiss to overlook the CARES Act. This other new piece of legislation shares more with the SECURE Act than a shouty sounding name. Like the above, the CARES Act rescues your tax dollars by allowing you to take an early distribution of up to $100k from certain tax-advantaged retirement plans— including 401(k)s, 403(b)s, 457s, and traditional IRAs—in 2020 without paying the 10% penalty usually imposed. As Covid-19 continues to inject uncertainty into the global economy, everyone ought to revise their wealth plan and make changes such as this into consideration.

4. Charitable Planning

Alongside the tax penalty for taking early IRA distributions, the CARES Act has suspended the AGI limits for cash contributions to charities during 2020. This means that if you’d like to make a charitable gift this year, you can effectively eliminate your tax liability by doing so.

Charitable giving also presents a solution to the SECURE Act’s elimination of the stretch IRA. In leaving your retirement account to charitable remainder trust (CRT) instead of having it pass directly to a beneficiary and then naming the intended recipient as a non-charitable beneficiary of the trust allows you to set a loved one up to receive life-long distributions without incurring an unnecessary tax bill. Once the trust has served its purpose, the sum remaining in the account will be donated to a charity of your choice.

While far from the only tax-saving tips available to those planning their retirement, the above all reflect new developments that you will want to discuss with your attorney. Don’t have an attorney? Luckily, we know a guy you can talk to—and if we may say so ourselves, he’s pretty good at what he does. Don’t hesitate to reach out!


Contact the Estate Planning Attorneys at Deliberato Law Center