2020 Time-Sensitive Planning Strategies for Grandparents

Posted by Haddad Nadworny on Wed, Oct 07, 2020 @ 08:00 AM

The Special Needs Financial Planning Team John Nadworny, CFP, CTFA | Cynthia Haddad, CFP | Alexandria Nadworny, CFP,  CTFA

2 Birds_pexels-pixabay-45853In a perfect world, grandparents would be able to confidently plan for their personal financial security during their lifetimes and also plan for their children and grandchildren as beneficiaries of their estate.

While ours is far from a perfect world, as year-end 2020 approaches there are time-sensitive financial planning strategies grandparents of children with special needs should be aware of and may want to consider:

  1. Contribute to an ABLE account
    1. An ABLE or 529 (A) account allows people with disabilities and their families to save for disability related expenses, while maintaining eligibility for Medicaid and other means-tested public benefits programs. Since ABLE (Achieving a Better Life Experience) accounts were created in 2014, there have been many changes both on the state and national level to provide further advantages for people with disabilities. In addition, the ability to use ABLE funds to pay for qualified disability expenses has expanded during Covid 19. ABLE account savings may make it possible to continue to afford to live independently in the community, pay for additional support services, grocery delivery charges, personal protective equipment and extra expenses during this pandemic or when other emergencies arise in the future. Source: https://www.ablenrc.org/able-accounts-and-covid19/
  1. Convert a traditional IRA to a tax-free Roth IRA and set up a Special Needs Trust as the Beneficiary of the retirement account.
    1. Background: The SECURE Act* eliminated the “stretch” provision of an inherited IRA for non- exception beneficiaries. Prior to the SECURE Act, the beneficiary of an inherited IRA could “stretch” the distributions required from the account over their lifetime. Now, inherited IRAs are subject to the 10-year rule; the assets in the account must be distributed to beneficiaries over the next 10 years. This has significant tax implications as inheritors are required to take distributions during what may be their prime earning years., Our blog, When a Special Needs Trust is the Beneficiary of a Retirement Account , goes into further detail and gives a detailed example of the substantial impact this change has on both account owners and their beneficiaries.
    2. An exception: Exception beneficiaries, including individuals with disabilities or who are chronically ill, may still “stretch” the distributions over their lifetime. To read more about the details, click here.
    3. It may make sense for retirees to consider converting a portion of a traditional IRA to a ROTH IRA to leave beneficiaries an account that will be completely tax-free. To read more about this strategy and see a case example, click

When determining if these strategies are appropriate for you, please consult with your financial, legal and tax professionals. To discuss these and other strategies, please act sooner rather than later and email or give us a call to discuss suitable next steps for your specific situation in 2020.

Let's talk!

* The Setting Every Community Up for Retirement Enhancement or SECURE Act was signed into law on December 20, 2019, becoming effective January 1, 2020. The law provides important changes for individuals and small businesses to consider in their retirement, estate and tax planning.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual, nor intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

Prior to investing in an ABLE account, investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's ABLE program. Withdrawals used for qualified disability expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.

 Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.

 

Financial planning and investment advice offered through Affinia Financial Group, LLC, a registered investment advisor. Securities offered through LPL Financial, Member FINRA/SIPC. Affinia Financial Group and LPL Financial are separate entities.

 

 

 

 

 

Tags: ABLE Accoount, Roth IRA, Grandparents

Preview: Planning Strategies for Grandparents Webinar 🎧

Posted by Haddad Nadworny on Fri, Sep 18, 2020 @ 07:00 AM

The Special Needs Financial Planning Team John Nadworny, CFP, CTFA | Cynthia Haddad, CFP | Alexandria Nadworny, CFP,  CTFA

Fall is here 🍁and families and communities are beginning the school year.  Whether the option is a phased return to the classroom, fully remote learning or a combination, there is little doubt that life this fall will require significant adjustments for both parents and students. Many families may require a tutor or aide to meet their child’s learning needs and the family’s childcare requirements.

 SNFP - Flyer - Webinar for Grandparents DigitalAs markets hover near all-time highs, and for many, family support needs have risen, it may make sense for grandparents to consider using a portion of their retirement funds to gift or plan to gift to family members. In our upcoming September 23 webinar, 2020 Year-end Strategies for Grandparents of People with Disabilities, we will discuss several options for grandparents and parents to think about and consider.

 Here’s a preview:

A relatively straight-forward strategy: The CARES Act eliminated the Required Minimum Distribution (RMD) from retirement accounts for 2020. Retirement account holders may elect to take their 2020 distribution and use it to gift or to pay for educational or therapeutic expenses for their grandchildren. While there will be taxes due on the distribution, the gifts, if under the $15,000, are tax exempt and there may be an additional exemption for direct payment for approved expenses.  Alternatively, it may be wise to remove these funds from the retirement account(s) this year and, as part of your estate plan, gift directly to an established pass-through Special Needs Trust (SNT).

A more complex strategy we will outline and discuss: The SECURE Act eliminated the “stretch” IRA distribution option for non-exception beneficiaries. Now all assets are required be distributed to beneficiaries by the end of 10 years, however annual RMD withdrawals are no longer required. 

The financial impact of deferring distributions is more substantial than one might think.  

Individuals with disabilities may qualify as an exception beneficiaries; we will discuss this option and you can read more about it in our blog, When a Special Needs Trust is the Beneficiary of A Retirement Account.

In addition we will also discuss a Roth IRA conversion as a strategy to consider; you can read more about it here.

Please join us Wednesday, September 23 @4PM to learn more about the strategies mentioned here and other timely planning tips and strategies.

RSVP

The information provided here is for general information only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

 All investing involves risk including loss of principal. No strategy assures success or protects against loss.

Past performance is no guarantee of future results.

 

Tags: Grandparents

2020 Year-end Planning Tips for Grandparents to Help - Webinar 🎧

Posted by Haddad Nadworny on Tue, Sep 15, 2020 @ 07:00 AM

 

 Webinar for Grandparents _September 23, 2020

 

If you are unable to see the flyer above: 

Parents and Grandparents, please join us for our webinar 🎧:

2020 Year-End Planning Strategies for Grandparents of People with Disabilities 

September 23, 2020 @ 4 PM

We will present guidance in aligning good intentions with the right plan. 

  • Prioritizing financial security and avoiding common planning mistakes.
  • Financial strategies especially appropriate in 2020
  • Tips to talk with family about multigenerational financial planning.

RSVP

 

 

 

Tags: Grandparents

Expert Tips to Prevent Identity Theft and Cybercrime

Posted by Haddad Nadworny on Sat, Aug 22, 2020 @ 07:01 AM

The Special Needs Financial Planning Team John Nadworny, CFP, CTFA | Cynthia Haddad, CFP | Alexandria Nadworny, CFP,  CTFA

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The Coronavirus pandemic has upended our lives on many levels. We do the best we can to stay on top of our finances, but stimulus checks, changes in tax filing dates, filing for unemployment benefits and other fallout of the pandemic have thrown us all a little off-balance and created a perfect breeding ground for scams and fraud.

We were recently invited to a virtual presentation given by Jeff Lanza, a retired FBI agent, who offered specific practices to help prevent fraud and keep our personal information from being compromised. He has 2 handouts for the public containing very useful information and easy to follow tips that we are sharing with you today. 

Identity theft & Cybercrime

For example, to protect your identity online, he suggests you think in terms of passphrases with 12 or more characters and presents solutions for passwords and password storage and protection. In many cases, it is just as valuable to know what not to do as knowing the right steps to take.  In the handout,  Jeff shares his view of what protective steps are effective and worth doing and those suggestions to be wary of. 

In terms of cybercrime, he discusses how to monitor your personal credit file and credit freezes, and how to stay safe from cyber fraud, email hijacking and account takeovers.

Please give the attached documents a read and we hope you find them helpful.

Preventing Identity Theft 

Preventing Cybercrime 

Please reach out to us with any changes or concerns that might effect  your financial planning. Let's try to stay safe out there on every level!

COVID concerns effecting your planning for the future?  Let's talk.

 

 

The ABLE Account: In US NEWS & Webinar TODAY!

Posted by Haddad Nadworny on Wed, Aug 05, 2020 @ 06:00 AM

The Special Needs Financial Planning Team John Nadworny, CFP, CTFA | Cynthia Haddad, CFP | Alexandria Nadworny, CFP,  CTFA

Featured in US News and World Report

US news and World ReportWe are proud to have Alex, John and Cindy featured in Friday’s US News and World Report article, What is an ABLE Account?”. The ABLE account, also known as a 529A account, is a tax-advantaged way for people with disabilities to build their own savings without impacting their eligibility for government benefits.  Please take a look at this helpful article that summarizes how the account works, who is eligible, contribution limits and approved uses for the funds.   Click here to take a look! 

ABLE Webinar Today!

ABLE-1Alex is the guest presenter for the Massachusetts Educational Finance Authority’s webinar, A Sibling’s Perspective: Special Needs Planning with the ABLE Account webinar this Wednesday at 6 PM. Alex will share her insight as a sibling of a brother with Down Syndrome and the financial planning needed to plan for his future. In addition, she will share her story and how she utilizes various tools, including ABLE, the tax-advantaged savings plan for individuals with disabilities, in her practice. RSVP here.

To read about additional planning strategies utilizing the ABLE account, visit our ABLE account page, the ABLE Account and Special Needs Planning, here

This is for general information only and is not intended to provide specific advice or recommendations for any individual, nor intended to be a substitute for specific individualized tax or legal advice. The investment strategies mentioned may not be suitable for everyone. Prior to investing in an ABLE account investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's ABLE program. Withdrawals used for qualified disability expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.

 

Tags: ABLE Accoount

Affinia On the Cover of Advisors Magazine

Posted by Haddad Nadworny on Fri, Jul 24, 2020 @ 08:00 AM

The Special Needs Financial Planning Team John Nadworny, CFP, CTFA | Cynthia Haddad, CFP | Alexandria Nadworny, CFP,  CTFA

Featured in Advisors Magazine 

Advisors Magazine Cover_July 2020

Let's catch up- we've had a lot going on this summer!

We are honored to announce that we are on the cover and are the feature article in the July 2020 edition of Advisors Magazine!  We feel the author did a great job capturing what our work with families of people with special needs is all about.  He explained our personal motivation in pioneering the field of special needs financial planning and how that has led to the founding of Affinia to carry forward our practice.  Please take a peek- click here!

 

Affinia by the garden

 

We are also excited to announce the launch of our new Affinia Financial Group website! Please click here to check it out- we’d love your feedback!

 

 

 

We are planning our Fall informational webinars - stay tuned for more information and in the meanwhile, please be safe and well and let us know if you are ready to begin your planning process. 

Let's start planning.

 

Tags: news and events

Retirees! RMD Waiver deadline extended

Posted by Haddad Nadworny on Wed, Jul 15, 2020 @ 06:30 AM

The Special Needs Financial Planning Team John Nadworny, CFP, CTFA | Cynthia Haddad, CFP | Alexandria Nadworny, CFP,  CTFA

RMD Rollback extended to August 31, 2020

Pexels_roll-of-american-dollar-banknotes-tightened-with-band-4386476The CARES Act (Coronavirus Aid, Relief, & Economic Security Act) enabled any taxpayer with an RMD due in 2020 from a defined-contribution retirement plan, including a 401(k) or 403(b) plan, or an IRA, to skip those RMDs this year. This includes anyone who turned age 70 1/2 in 2019 and would have had to take the first RMD by April 1, 2020. This waiver does not apply to defined-benefit plans.

The Internal Revenue Service has announced that anyone who already took a required minimum distribution (RMD) in 2020 from certain retirement accounts now has the opportunity to roll those funds back into a retirement account.  The 60-day rollover period for any RMDs already taken this year has been extended to August 31, 2020, to give taxpayers time to take advantage of this opportunity.  This repayment is not subject to the one rollover per 12-month period limitation and the restriction on rollovers for inherited IRAs.

If you have taken an RMD in 2020 and wish to roll those funds back into your retirement account, or have additional questions about your existing retirement account, please contact us. For savers/investors  considering rolling over an existing retirement account, we offer a complementary telephone consultation to discuss your individual situation.

Let's talk!

Tags: Retirement Planning

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