IRA distribution rules have changed several times over the past several years so we want to make sure that you are familiar with the current rules for new IRA distributions. In 2024, NO distributions are required by the original IRA or retirement account owner PRIOR to age 73. The maximum age for waiting to take your first IRA distribution was lengthened from 70 ½ to 73. So, from the year in which you turn 73 through the year in which you die, you MUST take what is known as a Required Minimum Distribution (or RMD for short). You can take out more money, but the government requires that you take out at least the RMD amount annually. The amount of the RMD must be recalculated annually and the amount is determined by taking the year-end balance of the account on the last day of the prior year and dividing by the government’s life expectancy for you. To make it a little more challenging, there are several different life expectancy tables that could apply depending on who the beneficiaries of your IRA are. When the account owner dies, if he or she was married and named his or her spouse as the beneficiary, there will be a tax-free spousal rollover of the account balance into either a new IRA account for the spouse or the amount can be rolled into the spouse’s pre-existing IRA account. If the deceased spouse was required to take an RMD in the year in which they died, and did not, the surviving spouse must distribute that amount by the end of the year. In subsequent years, no additional IRA distributions are required until the surviving spouse who inherited the IRA reaches age 73. If the deceased spouse was younger than 73, no RMD is required by the inherited spouse in the year of death. For inherited IRA’s, those inherited by someone other than the deceased’s spouse, the rules are a little bit different. In the year that a person dies, if they’ve already taken their required distribution for the year, no other distributions are required from any family members who might inherit the IRA. If the original IRA owner, who passed away during the year, has not taken his or her required distribution for the year, then the beneficiaries are required to take out that amount based on their percentage ownership. For example, if two siblings inherited 50% each from a mother’s IRA account, each sibling must take half of what the mother was required to take out that year by the end of the year in which she died. Those are the only required distributions for that calendar year. In the following year the inherited IRA beneficiaries are required to take 1/10th of the amount that was in their inherited IRA as of December 31st of the year in which the person died. In subsequent years, you drop the denominator by one and take one-ninth and then one-eighth, etc. until the tenth year in which you must fully deplete the balance in the inherited IRA account. These inherited IRA distribution rules even apply to Roth IRA’s. The original Roth IRA owner has no required distributions during their lifetime. The same is true if there’s a spousal rollover and the spouse becomes the owner of that Roth IRA. However, once it is inherited by someone else, the individual or individuals who inherit the Roth IRA have the same 10-year distribution rules as they would from owning an inherited Traditional IRA. However, unlike traditional IRAs, the required Roth IRA distributions are not taxable to the beneficiary. Worth Noting: If a Special Needs Trust for the benefit of an individual with a disability inherits an IRA account, in most cases the Trust can stretch the IRA distributions over the disabled person’s life expectancy. The Trust is NOT required to fully deplete the Inherited IRA over a 10-year period. The failure to take the required distributions can lead to penalties of up to 25% of the amount that was required to be distributed. If all of these rules seem complicated, don’t worry, we understand them and are happy to help you avoid the penalties for distribution mistakes.
Hi, I’m Neil Mahoney, a Senior Consultant at Oak Wealth Advisors. Today, I want to share a few quick financial planning reminders as we approach the end of 2024. It’s a great time of year to reflect on the past, see what still needs to be done, and begin planning for next year. But before we dive into details, I want to share that Oak Wealth Advisors has access to tax planning tools that allow our advisors to model out custom “what-if” tax planning scenarios to help clients understand how financial decisions could impact their tax situation. For example, we can help reduce surprises by estimating tax refunds and taxes due many months before tax filing time. We can estimate a client’s tax rate and how changing income or deduction amounts could cause a slide into a higher or lower tax rate. So I invite our clients to reach out to their advisor for help with tax planning. Now let’s dive into some things to think about heading into December and January. If possible, maximize contributions to your retirement savings accounts for 2024. IRAs and Roth IRAs have a limit of $7,000, plus an extra $1,000 if you’re age 50 or older. Health Savings Accounts and Flexible Savings Accounts have an individual limit of $4,150 and a $1,000 catch-up, if age 55 or older. For families on high deductible health insurance plans, the HSA limit is $8,300 and the catch-up for those age 55 or older is an additional $2,000. The deadline for making both IRA and Health Savings Account contributions in the same as your tax filing deadline, which is typically April 15th of 2025. Disability-related ABLE savings accounts in 2024 have a contribution limit of $18,000 and the deadline is December 31st. Charitable contributions need to be made by December 31st to be deductible in 2024. For people over age 70 and a half, Qualified Charitable Distributions are available from IRA accounts, with an annual limit of $105,000 for 2024. For cash charitable contributions, you can deduct up to 60% of your adjusted gross income in one year, and higher contributions can be carried forward into future tax years. If you are converting traditional IRA funds to a Roth IRA, make sure you are properly planning out this strategy with a financial advisor and tax accountant and that conversion amounts for 2024 are completed by the end of the year. Lastly, with a new year approaching, I encourage you to begin thinking about your financial goals for the new year. What are some things that you want to accomplish or change in 2025 that will support your financial well-being? As always, we encourage you to reach out to your advisor if you have questions or comments about your financial planning. Enjoy the holidays!
In this video, we share key 2025 charitable planning tips to help you maximize your giving before new tax laws take effect next year. Hi, this is Mike Walther from Oak Wealth Advisors with your 2025 charitable planning tips. Before we get into the details of the planning, I want to recommend that everyone reach out to their tax accountant and confirm their tax planning before moving forward with this or any other tax planning advice. The last thing you want to do is get a great idea, have it be inappropriate for your personal situation, and make a bad decision. So again, take this information and work with your tax advisor to implement it for your own family. Let’s first look at what has not changed as a result of the One Big Beautiful Bill Act, which had many impacts on your tax planning going forward. First, for those of you who are over age 70, you can continue to make charitable gifts directly from your IRA account. These are known as qualified charitable distributions, or QCDs. Those distributions to charity count as part of your required distributions for the year and are non-taxable. It’s a wonderful way to get money out of your IRA account tax-free. Second, for those of you who make significant gifts over multiple years, using a donor advised fund allows you to move the assets you’re planning on gifting into an account now and collect the entire charitable deduction in the current tax year, even if the gifts are spread out over time. So, those are two tools you can use to take advantage of charitable giving in 2025 before the rules change in 2026. Now, what’s changing? There are a couple of limitations coming that will make your gifts in 2026 a little less valuable for tax purposes. First, there will be a floor of 0.5% of your income that’s disallowed with respect to charitable gifts. For example, if you earn $500,000 in income in 2026 and give away $10,000, the first $2,500 of that gift will be non-deductible. You’ll still have $7,500 deductible, but you lose the first $2,500. If your income was $1,000,000, you’d lose $5,000 of deductions. This is avoidable if you make gifts in advance in 2025 instead of waiting until 2026. In addition, for those of you in the highest marginal tax bracket of 37%, your charitable deduction will be capped at 35%. That reduction in the tax benefit only affects those in the highest tax bracket, but combined with the floor, it will really limit what wealthier clients are able to deduct in 2026 from their charitable gifts. So, what should you be doing? First, reach out to Oak Wealth Advisors and your tax advisor to figure out what makes sense for your family. In many cases, it may make sense to accelerate your 2026 charitable gifts into 2025. Second, you might want to fund a donor advised fund in 2025 and then make gifts out of that fund in future years to meet your giving objectives. Third, if you’re over age 70, qualified charitable distributions continue to be an effective tax planning technique. They allow you to take money out of your IRA, avoid taxation, and send it directly to a qualified charity. And finally, for those who want to be more strategic with your planning, we encourage you to use the new Family Giving Workbook. This tool helps families share their planning and giving intentions with the younger generation, encouraging them to carry out those goals and wishes when parents pass away. It also helps younger generations get more involved in the planning process. The workbook supports family dialogue and helps ensure your long-term intentions are carried out. With that, we encourage you to keep watching our updates as we produce them. Follow us on YouTube, listen to the Special Needs Voice podcast, and take advantage of those resources for your family’s planning. Please reach out to your Oak Wealth Advisor if you have any questions or want more information about your tax planning. Thanks so much.
Hi, this is Mike Walther from Oak Wealth Advisors with your way-too-brief update on the new tax act called the One Big Beautiful Bill that was recently passed and will be impacting all of us over the coming years. As you can see from this first slide, there are a number of items that have been in the news that are going to impact all of us—related to state and local taxes, no taxes in the future on tips and overtime, the deductibility of auto loan interest being something new, and a new child tax credit. Those are just a few of the many provisions in the new tax act. However, as you can see from this chart, all those benefits phase out depending on your income. So while the new tax breaks may sound great at first, many of you will be ineligible for some or all of them based on your income level. In addition, when looking at the timing of when these changes take effect, some policies and programs are ending this year—those are shown in pink on the left of the slide. Others will be implemented in the coming years, but they may only last three or four years. These short timelines are designed to help the overall budget accommodate the tax breaks. That being said, it’s important to understand when and how these different rules from the Tax Act are going to impact your planning. If your family benefits from government assistance, you’ll want to be aware of the changes to programs like SNAP and Medicaid. There are new rules for those programs as well, which are set to be implemented as soon as next year. Finally, student loans will also be affected. Some of the more beneficial repayment plans are going away. So, if you’re currently repaying student loans and taking advantage of those plans, you’ll want to consider accelerating your payments before you lose the opportunity to benefit from those favorable terms. All in all, this is a complicated and evolving situation. We know it’s tough to wrap your head around it—and we’re here to help. At Oak Wealth Advisors, we use tools like Right Capital and Holistiplan to help with both next year’s tax planning and your long-term financial strategy as these changes unfold. Please reach out to your advisor at Oak Wealth Advisors. We’re happy to walk through your questions and show you, using models, how this will impact your planning for the next several years. We look forward to hearing from you. Best wishes.
Hi, I’m Mike Walther from Oak Wealth Advisors with a different approach to planning.
I want everyone to think about what’s most important in their planning and whether or not the financial planning they’ve been doing actually addresses those things. What we’re talking about today is not the administrative planning that’s probably already been done for you, which would include estate planning. Medical directives, end of life planning, funeral and burial wishes, things you’ve probably already communicated to your family that you’ve completed with your attorney or financial planner. What I’m talking about is the things that are truly most important to you and to your family. We’d call that pre-mortem planning.
What would happen if you were gone tomorrow? What would you regret not doing? What relationships should have been repaired that wasn’t? So if you gave yourself a month or a year. And had to get the most important things done. What would those priorities be? Let’s focus on those together and see how we can help you get them done. Let’s wipe out the top of the bucket list. Maybe we can’t complete everything, but let’s do the things that are the very most important to you and your family.
In addition, when you’re gone, how do you want to be remembered? Is there something you can do to make sure that that legacy that you have in mind actually gets carried out when you’re gone?
And then maybe most importantly, if you’re in charge of someone else’s care. Be it a parent or a child with a disability, what are those challenges they have? Is it something related to mobility? Is it decision-making or communication? Well, if you’re not here to assist with those vital elements of their life, what’s going to happen? Think about what’s happening if you’re gone for just a day and can’t be involved in those processes. What if you’re gone for a week? What kinds of supports would be needed? What if you looked at it for an entire month? And said if I wasn’t there, all these things would fall apart in my absence.
Let’s get those things documented, whether it’s a routine, medicine or medications, likes and dislikes. What are their abilities and their challenges? And also what’s important to the family? What are those religious or family traditions that should be carried on if you’re not around? Now, I know that’s a lot to try to take in, but it’s probably the most important focus you can have for your planning and to assist you with getting all that organized and documented and shared.
There are several online support tools from Danny Plan to Vest Life to Ellie Plan, all of which assist families in organizing and sharing their most important information. So we hope today’s information will be helpful to you and your family to really focus on what’s most important to you. There are no right or wrong answers, but getting laser focus on what’s most important and working with a firm like Oak Wealth Advisors to help you execute and get that planning done. It can be absolutely beneficial to everyone in your entire family.
With that, we’ll leave you with our contact information and we’ll hope to hear from you soon. Best wishes.
