Switch to ADA Accessible Theme
Close Menu
Naples Estate Planning Lawyer > Naples IRA Planning Lawyer

Naples IRA Planning Lawyer

Individual Retirement Accounts (IRAs) are a popular choice to plan and invest for retirement while taking advantage of significant tax breaks. There are many different types of IRAs that may be available or appropriate, depending on employment status and other factors. You can also sometimes convert an IRA from type to another, such as converting a Traditional IRA to a Roth IRA. Choosing which type of IRA to use and deciding whether to convert an IRA have advantages and disadvantages and should be considered in consultation with a knowledgeable and experienced financial advisor or Estate Planning attorney.

IRAs may play an important role in your overall Estate Planning strategy. At Nici Law Firm, P.L., we can help you understand your options, including the tax benefits and consequences, when it comes to IRAs and other retirement planning. Naples IRA planning lawyer James R. Nici is Board-Certified by The Florida Bar as a Specialist in Wills, Trusts & Estates. He also holds a Master of Laws (LL.M.) degree in Taxation above and beyond his Juris Doctorate law degree. In Naples and southwest Florida, call Nici Law Firm, P.L., at 239-449-6150 or contact us online for answers to all your Estate Planning questions and a comprehensive, effective estate planning strategy that includes IRAs as appropriate.

New tax law changes for IRAs are effective for 2020

Congress passed the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) in 2019, and the President signed it on December 20, to be effective January 1, 2020. The SECURE Act is a piece of legislation spanning more than 100 pages that makes many changes to retirement rules affecting IRAs. Below are a few key takeaways you should know about IRA changes in the SECURE Act:

You can wait longer to take distributions from your Traditional IRA. Prior to the SECURE Act, IRA holders were required to start taking Required Minimum Distributions (RMDs) at age 70 ½. The new law pushes this requirement to age 72. If you are fortunate enough to be in a position where you don’t have start taking distributions at age 70 ½, the change allows you to let your IRA grow for a longer period, enhancing your retirement savings.

The requirement to take RMDs applies to Traditional IRAs as well as employer tax-deferred plans such as a 401(k), 403(b), or 457 plan. The extension does not apply to those turned 70 ½ in 2019 or are already receiving distributions from their IRA.

You can contribute to your IRA for a longer time. Before the SECURE Act, you had to stop making contributions to your IRA at age 70 ½. Now, you can continue contributing to your IRA for as long as you want, provided you have earned income in the year you contribute. If you are over 70 and can continue making IRA contributions, should you? Talk to your financial advisor or Estate Planning attorney to make sure you are making the wisest use of your investments.

Distributions to non-spouse individual beneficiaries must be made within ten years. IRA holders can no longer stretch RMDs from an inherited account over their lifetime. This rule also applies to a 401(k) and other defined-contribution plans. The law does provide some exceptions, including for spouses, minor children, disabled individuals, and people less than ten years younger than the decedent). This change only applies to inherited retirement accounts which are inherited in 2020 or later.

Does it matter how I make beneficiary designations on my IRA?

Beneficiary designation is an important area where thoughtful, expert IRA planning can be very helpful. For instance, you may want to designate a revocable living trust as an IRA beneficiary. On the other hand, there could be significant adverse tax consequences from doing so, particularly if there is a surviving spouse. Always consult with your estate planning attorney and tax advisor before naming your trust as the beneficiary of an IRA or pension plan (401K, Keogh).

If you have recently become part of a blended family (remarriage with children from a previous marriage), discuss your current beneficiary designations with your spouse and whether you are planning any changes or not. If creating a prenuptial agreement prior to the marriage, provide a recent IRA statement in your financial disclosures, and indicate whether you have begun receiving the required minimum distribution amount. Our office can advise and assist you with any blended family estate planning questions you may have.

What is the difference between a Traditional IRA and a Roth IRA?

In a Traditional IRA, contributions reduce your taxable income in the year you make them. Withdrawals are taxed when you retire, which in theory will be at a lower tax rate than you incur during your earning years. Careful planning is part of making sure this is the case. Federal law limits how much you can contribute in a year to only $6,000 or $7,000, but if you start early and invest wisely, you can grow your IRA over time to a significant investment.

In a Roth IRA, contributions are not tax-deductible when you make them, but you take distributions tax-free. Roth IRAs do not come with required minimum distributions. However, your ability to contribute phases out as your income increases, as opposed to Traditional IRAs, which don’t have income limits. Otherwise, a Roth has the same annual contribution limits as a Traditional IRA.

Other types of IRAs include the SEP IRA and SIMPLE IRA. These plans are set up by an employer. A SEP IRA is funded by employer contributions, while both the employer and employee can contribute to a SIMPLE IRA.

Get Sound Advice and Professional Expertise with IRA Planning in Naples and Southwest Florida

At Nici Law Firm, P.L., we provide knowledgeable legal advice and expert assistance in IRA planning as part of our comprehensive approach to tax-advantaged estate planning in southwest Florida. Call our office at 239-449-6150 or contact us online to schedule a complimentary consultation at our Naples office.

Share This Page:
Facebook Twitter LinkedIn