Richardcyoung.com

The Online Home of Author and Investor, Dick Young

  • Home
  • Debbie Young
  • Jimmy Buffett
  • Key West
  • Your Survival Guy
  • How We Are Different
  • Paris
  • About Us
    • Foundation Principles
    • Contributors
  • Investing
    • You’ve Read The Last Issue of Intelligence Report, Now What?
  • The Great Reset
  • The Swiss Way
  • My Rifles
  • Dividends and Compounding
  • Your Security
  • Dick Young
  • Dick’s R&B Top 100
  • Liberty & Freedom Map
  • Bank Credit & Money
  • Your Survival Guy’s Super States
  • NNT & Cholesterol
  • Your Health
  • Ron Paul
  • US Treasury Yield Curve: My Favorite Investor Tool
  • Anti-Gun Control
  • Anti-Digital Currency
  • Joel Salatin and Alfie Oakes
  • World Gold Mine Production
  • Fidelity and Vanguard Since 1971

The IRS is Coming after Your IRA with this Hidden Tax

July 12, 2019 By E.J. Smith - Your Survival Guy

By pathdoc @ Shutterstock.com

More sausage is being made down in Washington D.C.—never a good thing especially when “revenue” and “IRA” are used in the same sentence.

Life Comes at You Fast. Slow It Down with My Friday Email. It’s Free.

It’s called the SECURE Act, which laughably stands for Setting Every Community Up for Retirement Enhancement.

It sailed through the House 417-3 and is expected to pass under unanimous consent by the Senate.

The insurance industry loves the Secure Act.

Uh-oh.

At the heart of their love affair with this foul ball is the introduction of annuities as investment options for 401(k) plans.

The reason they haven’t been offered in the past is because companies didn’t want to be on the hook if the insurer providing the annuity went belly up.

Remember, annuities are insurance products. Their solvency depends on the solvency of the insurer providing them.

They are not a diversified mix of stocks/bonds. They are YOU and the insurer, and perhaps a state guarantee that has hardly been tested.

The reason they’ll begin to be offered in 401(k)s is the insurance lobby saw to it that the Secure Act will not hold 401(k) sponsors liable if an insurer goes bankrupt.

Swell.

Release the hounds! You can bet anyone and everyone who has a 401(k) will be treed by insurance dogs attacking them with the annuity spiel.

Hidden out of site will be their high fees, high surrender charges, and dependency on the solvency of the insurer. No thanks!

Think you’ll understand what you’re buying? Please. The prospectus is about as clear as the tax code.

401(k) investors beware. I’ve never liked a business model that benefits when you die.

OK, then. The other bad news in this pathetic Secure Act is the elimination of the stretch IRA.

A stretch IRA works like this; Let’s say you have an IRA, your wife is your beneficiary and your two children are the secondary beneficiaries.

When you die, your wife takes the required minimum distribution (RMD) on her life expectancy.

Then, when she dies, the kids get it and it’s distributed based on their life expectancy, usually a long time, say 30-years. This long payout allows your children to avoid a massive tax obligation over a short period of time.

That’s gone.

The Secure Act eliminates the secondary beneficiary “stretch” or life expectancy RMD and defaults to 10-years.

That’s it.

You can imagine how this plays out.

Your kids are maybe in their prime earning years and inherit the IRA. They’ll have to clear it out within ten years.

I would make sure you have a conversation with your wife to explain how this works, and then explain to the kids that they will need to be ready for a potential windfall that will show up as taxable income.

Strategies?

There will be many.

My idea is to maybe take all of it over three to five years when the kids can somehow live off dividends and cap gains and drop their income as low as possible.

And the good? Hmmph. There’s a couple crumbs I guess. The RMD age goes from 70 1/2 to 72. Big deal. And there’s no age limit on IRA contributions. Not that you’re going to be contributing much in retirement.

Basically, the Secure Act is a stealth tax and a fee grab courtesy of your elected bozos in Washington and the insurance lobby.

Originally posted on Your Survival Guy.

If you’re willing to fight for Main Street America, click here to sign up for the Richardcyoung.com free weekly email.

Related Posts

  • Part II: The IRS is Coming for Your IRA
  • Roth IRA Tax Reform
  • A Hidden Tax in the New Illinois Budget
  • Author
  • Recent Posts
E.J. Smith - Your Survival Guy
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998.

E.J. has trained at Sig Sauer Academy in Epping, NH, NH, where he completed course-work in Practical and Defensive Handgun, Conceal Carry Pistol, Shotguns, Precision Scope Rifle and Kidnapping Prevention.

E.J. plays a Yamaha Recording Custom drum set with Zilldjian cymbals. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris.

Please get in touch with E.J. at ejsmith@yoursurvivalguy.com

Click here to sign up for my free monthly Survive & Thrive letter.
Latest posts by E.J. Smith - Your Survival Guy (see all)
  • Don’t Ask Me When to Haul Your Boat - September 20, 2023
  • You May Be Surprised by America’s “Least Woke City” - September 20, 2023
  • Americans Are Not Happy with Bidenomics - September 19, 2023

Dick Young’s Must Reads

  • Democracy & Diversity: Not In the Constitution
  • Your Survival Guy’s 2022 Super States: #1 New Hampshire
  • The Fed – “Independent” and “Non Political” – Joins The Resistance
  • “An Epic Struggle Over the Definition of America”
  • Progressive Liberalism Has Dragged America near Ruination
  • The Masters of the Universe Align Themselves with CHINA Using YOUR Money?
  • Your Odds with Statins: 500 to 1?
  • Is It All Coming Apart in the Government’s Face?
  • The Simple, Elegant Power of the Retirement Compounders
  • Protection While Traveling in France

Our Most Popular Posts

  • A High-Speed Collision with Reality
  • New York Finds a New Way to Harass Gun Owners
  • Will the UAW Get What It Wants?
  • Americans Are Not Happy with Bidenomics
  • Ron Paul Exposed the Fed and the Neocon Scam
  • Don't Tread on America's Children
  • Bidenomics Gutting Real Household Income
  • “I Want to Be a Farmer, a Garbageman, or Tom Brady”
  • Do You Really Need 8 Glasses of Water a Day?
  • Are You Guys Ready? Let’s Roll!

Compensation was paid to utilize rankings. Click here to read full disclosure.

RSS Youngresearch.com

  • Don’t Ask Me When to Haul Your Boat
  • Robot Warehouses Need Better Internet
  • California Mandates Drive Diesel Truck Buying Spree
  • Americans Are Not Happy with Bidenomics
  • Paris’s Big Plans for the Champs-Elysées
  • A Plan for Cutting Federal Government Spending
  • Investing Mistakes to Avoid: #1 Y-O-U
  • Mr. Protect and Preserve: For Where We’re Going
  • Real Incomes Fall Again Under Biden
  • “Jesse’s Going Crazy, Just Running Along the Edges”

RSS Yoursurvivalguy.com

  • Don’t Ask Me When to Haul Your Boat
  • You May Be Surprised by America’s “Least Woke City”
  • GREENWASHING: What’s in a Name?
  • Americans Are Not Happy with Bidenomics
  • “Oh, That Wasn’t So Bad”
  • Prepared for When the Next Black Swan Swoops In?
  • Investing Mistakes to Avoid: #1 Y-O-U
  • New York Finds a New Way to Harass Gun Owners
  • Just a Few Problems I See with AI Portfolios: Part I
  • “I Want to Be a Farmer, a Garbageman, or Tom Brady”

US Treasury Yield Curve: My Favorite Investor Tool

Five Year Treasury Yield

A Bulletproof Story Goes Amok

Don’t Ask Me When to Haul Your Boat

40 Cities that Changed the World

You May Be Surprised by America’s “Least Woke City”

Copyright © 2023 | Terms & Conditions | About Us | Dick Young | Archives