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 at Affinia Financial Group John Nadworny, CFP, CTFA | Cynthia Haddad, CFP, ChSNC | 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, see The "10 Year Rule" and After-Tax Strategies to Consider. 

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 at Affinia Financial Group John Nadworny, CFP, CTFA | Cynthia Haddad, CFP, ChSNC | 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.


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.





Tags: Grandparents

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