First, beginning in 2020 the age for mandatory Required Minimum Distributions (RMD) from IRA and other retirement plans that require an RMD will be increased to age 72 from the past 70 ½ rule. IRA account owners will not need to begin distributions until the year in which they reach age 72. Unfortunately, those that have or did reach age 70 ½ by 12/31/2019 are not affected by this new law and will still have to receive their RMD even though they have not reached age 72 in 2020.

The second major change to the law will allow contributions to traditional IRA accounts beyond the age of 70 ½ . Prior to 2020 those that reached age 70 ½ were not allowed to continue contributions to their IRA accounts. Keep in mind the IRA owner must have earned income and meet the income limits for contributing to these plans.

The final change made by the new law will affect beneficiaries receiving IRA accounts from deceased IRA owners. This changes also affects other defined contribution plans like 401k and SEP plans. Unless the beneficiary meets one of the five exceptions listed below they will need to draw down the inherited plan proceeds within 10 years. The lifetime distribution rule is no longer available. The five exceptions to the new law for beneficiaries are:
1. The surviving spouse
2. A child who has not reached the age of majority (NOTE! The 10 year rule begins when the child reaches the age of majority)
3. Disabled
4. Chronically ill
5. Not more than 10 years younger than the deceased IRA owner.

There are several other changes to law with regards to pension plans contained in the new legislation. We have only highlighted those that directly affect IRA accounts. The changes listed above are only general in nature and may change slightly when written into the Internal Revenue Code or other areas of tax law.

If you have any questions concerning the new law that went into effect December 20, 2019 we recommend you contact your tax consultant.

The post Effects of the SECURE Act on IRA Accounts appeared first on FCSU.

While many baby boomers (i.e. – those ages 55 to 73) are in or nearing retirement, 17% say they have less than $5,000 in retirement savings.

If you or someone you know is in this situation, think IRA. Individual Retirement Accounts (IRAs) were designed for just that purpose – to help Americans save money for retirement. There’s still time If you are looking to open an IRA, or add money to your existing account for the 2019 tax year – but you shouldn’t delay. The deadline for filing your 2019 taxes – April 15, 2020 – is right around the corner.

For help deciding on opening or adding to an IRA, we’ve included information here. It includes information based on the IRS website and other industry sources that cover IRA benefits in general as well as highlights of the similarities and differences between the two basic types of IRAs – traditional and Roth IRAs – to help you decide which is best for you.

Before making your final decision, always consult your tax advisor. For guidance on the FCSU annuity products that are IRAs, call the FCSU Home Office at 1-800-533-6682 or contact your local FCSU branch.

Fraternally,

Kenneth A. Arendt
Executive Secretary

The post All about IRAs appeared first on FCSU.

Rule #2: Contributions to a Roth IRA are not Tax-deductible.
The opposite of Rule #1 for a traditional IRA applies to a Roth IRA. With a Roth, you have to pay tax upfront on the money you contribute to it. However, both your contributions and earnings can be withdrawn tax free when you retire.

Rule #3: Anyone with Earned Income Can Have an IRA
Anyone under the age of 70 ½ who earns a taxable income can open and contribute to a traditional IRA.

Rule #4 – This includes Minors
Your child – regardless of age – can contribute to an IRA provided he or she has earned income from a job. This makes an IRA an excellent savings vehicles for children who, because of their age, are able to take full advantage of time – and the power of compounding.

Rule #5: It also includes Spouses without Earned Income
If you’re married and file a joint tax return and just one of you has compensation, both of you can have an IRA. So an unemployed or stay-at-home spouse can save for retirement with his or her own IRA.

Rule #6: IRAs Cannot be Owned Jointly
It is important to keep in mind, though, that all retirement accounts must be owned by individuals, even if you’re married and file a tax return jointly.

IRA Rule #7: You Can’t Fund an IRA for Someone Else
Each owner of a retirement account must qualify to open up and contribute to an IRA. You’re not allowed to mix funds either, by rolling over money into another person’s retirement account. A parent can’t fund a retirement account on behalf of a child, either.

Rule #8: There’s a Maximum but No Minimum IRA Contribution Requirement
While there is an annual allowable contribution limit, you choose whether you want to contribute to an IRA each year or not. If you don’t make a contribution, traditional and Roth IRAs can stay open indefinitely. The 2018 combined annual contribution limits for Roth and traditional IRAs are: Under age 50: $5,500 (increases to $6,000 for 2019). Age 50 or older: $6,500 (increases to $7,000 for 2019.)

Rule #9: You Can Have More than One IRA.
You can open up and contribute to as many traditional and Roth IRAs as you like. However, your total contributions to all of them can’t exceed your annual allowable limit..

Rule #10: You Can Contribute to Both an IRA and a Workplace Retirement Account.
You can contribute to a retirement plan at work—like a 401(k), 403(b), or 457—and still contribute to an IRA in the same year. Remember, though, if you or your spouse has a workplace retirement plan, the tax deduction for your IRA contributions may be reduced or eliminated, depending on your income.

The post Top 10 IRA Rules to Remember appeared first on FCSU.

If you or someone you know is in this situation, think IRA. Individual Retirement Accounts (IRAs) were designed for just that purpose – to help Americans save money for retirement. There’s still time If you are looking to open an IRA, or add money to your existing account in the 2017 tax year, – but you shouldn’t delay. The deadline for filing your 2017 taxes – April 17, 2018 – is right around the corner.

For help deciding which type of IRA is best for you, the following chart from the IRS website may be helpful. It provides information about the two basic types of IRAs – traditional and Roth IRAs – and highlights some of their similarities and differences.

Before making your final decision, always consult your tax advisor. For guidance on the FCSU annuity products that are IRAs, call the FCSU Home Office at 1-800-533-6682 or your local FCSU branch.

Fraternally,
Kenneth A. Arendt
Executive Secretary

The post Remember Your IRA This Tax Season appeared first on FCSU.

Keep in mind that insurance isn’t intended to guarantee that your spouse won’t have to work after you die. It’s to make your family as financially comfortable without you as with you.

During September, designated Life Insurance Awareness Month by leaders in the insurance industry, I’d like to share some important facts* from LIMRA (the Life Insurance Marketing and Research Association).

Fact: Buying Insurance is An Act of Love
The first fact is that love and life insurance are inseparable. Love is powerful. Nowhere is it more apparent than when you’re getting married and starting a family. LIMRA research shows that life events like these are the most likely to prompt shopping for life insurance. Love and life insurance are inextricably linked together. Why? Because you want to protect the ones you love.

The top reasons people buy life insurance are: to cover burial and other final expenses; to help replace lost income; to help pay off the mortgage; and to transfer wealth or leave an inheritance. Each of these protects loved ones from financial stress.

Industry findings indicated that one-third of Americans would be financially impacted by the loss of the primary wage earner in just one month. September is a great time to remember that purchasing life insurance is a great way to say “I love you” to your family members, by keeping them financially secure.

Fact: Confusion & Misunderstanding Abound
Unfortunately, studies also show that many people don’t have the coverage they need. Only 44 percent of American households have individual life insurance – that’s the lowest number in half a century. The good news is that half of all households realize they need more. But only 10 percent of households will actually buy life insurance this year. What’s holding people back? LIMRA research finds that consumers misunderstand insurance as too expensive when in actuality the great majority of them have overestimated the cost of purchasing a policy. Or they prioritize other financial needs over insurance rather than thinking of life insurance as a critical part of an overall sound financial plan.

The bottom line is that there is a lot of confusion and misunderstanding surrounding the idea of life insurance. LIMRA has found that there are some 19 million “stuck” shoppers – i.e., those unable to make the final decision to buy a policy – in the U.S. who are confused by what they see.

Fact: Conversations Can Get Things Started
It doesn’t need to this way. With a little guidance and support, more people can get their loved one protected with the right insurance policy. LIMRA finds that the more people talk about their long-term goals, the less likely they are to put them off. Getting the conversation started is a great step in the right direction.

Don’t procrastinate! Talk over your insurance needs with your family, then call or visit your local branch officer and have them explain our different insurance products; or call the Home Office at 1-800-533-6682.

*All findings are from LIMRA’S recent U.S. consumer studies.

The post Facts for Life Insurance Awareness Month – September 2016 appeared first on FCSU.

A: For 2016, you can contribute up to $18,000 if under the age of 50, and up to $24,000 if over the age of 50.

The post Financial Friday – 401k Tips appeared first on FCSU.

A: You have 3 extra days to make your annuity or IRA contribution this year. Deadline is April 18, 2016. If you don’t have an annuity or IRA and would like to learn more about saving for retirement, please view our products.

The post Financial Friday – Taxes appeared first on FCSU.