Your Survival Guy

Preparing your investments and family for when disaster strikes.

Disclosure

  • Home
  • Your Survival
    • EMP Threat
    • Tucker Explains
    • Newport Gas Outage
    • Water
      • Emergency Water Storage
      • Let There Be Water
    • Get Your Gun and Your Training Now
    • Satellite Phones
    • Navy SEAL Survival Kit
  • Your Money
    • Coronavirus Infects Stock Market
    • Looking for a Better America
    • You Invest, They Win
    • Where to Keep Your Cash
    • Paris
    • How to Buy a Boat
    • Dead or Alive? The Future of Long-Term Investing
    • Is Vanguard too Big?
    • Cryptocosm and Life After Google
    • The Last Intelligence Report
    • The Truth Behind the S&P 500
    • RAGE Gauge
    • How Many “Retirees” Will Keep Working?
    • Your Retirement Life
    • You’ll Love This if You’re Dreaming of an Active Retirement Life
  • Weapons
    • Self Defense
    • Every Family Should Own at Least One Shotgun: Here Are Three
  • About Me
    • Preparing for Times Like These
    • My Videos/Pics
    • Music
      • RIP Neil Peart: You Will Always Be Remembered as a “Modern-Day Warrior”
  • You
    • Our Cabin on Kodiak, Alaska
    • If You Are in Pain, this May Help. It Helped Me.
    • How to Save for a Grandchild
    • FIRE! Financial Independence, Retire Early
    • Compound Interest
    • Arithmetic of Portfolio Losses
    • Maximum Portfolio Withdrawal Rate
    • An Efficient Frontier
    • Retirement Compounders
    • Counterbalanced Total Returns
  • Survive & Thrive
    • April 2021
    • March 2021
    • February 2021
    • January 2021
    • December 2020
    • November 2020
    • October 2020
    • September 2020
    • August 2020
    • July 2020
    • June 2020
    • May 2020
    • April 2020
    • March 2020
    • February 2020
    • January 2020
    • December 2019
    • November 2019
    • October 2019
    • September 2019
    • August 2019
    • July 2019
    • June 2019
    • May 2019
    • April 2019
    • March 2019
    • February 2019
    • January 2019
    • December 2018
    • November 2018
    • October 2018
    • September 2018
    • August 2018
    • July 2018
    • June 2018
    • May 2018
    • April 2018
    • March 2018
    • February 2018
    • Welcome

The IRS is Coming after Your IRA with this Hidden Tax

July 12, 2019 By E.J. Smith - Your Survival Guy

By pathdoc @ Shutterstock.com

More sausage is being made down in Washington D.C.—never a good thing especially when “revenue” and “IRA” are used in the same sentence.

It’s called the SECURE Act, which laughably stands for Setting Every Community Up for Retirement Enhancement.

It sailed through the House 417-3 and is expected to pass under unanimous consent by the Senate.

The insurance industry loves the Secure Act.

Uh-oh.

At the heart of their love affair with this foul ball is the introduction of annuities as investment options for 401(k) plans.

The reason they haven’t been offered in the past is because companies didn’t want to be on the hook if the insurer providing the annuity went belly up.

Remember, annuities are insurance products. Their solvency depends on the solvency of the insurer providing them.

They are not a diversified mix of stocks/bonds. They are YOU and the insurer, and perhaps a state guarantee that has hardly been tested.

The reason they’ll begin to be offered in 401(k)s is the insurance lobby saw to it that the Secure Act will not hold 401(k) sponsors liable if an insurer goes bankrupt.

Swell.

Release the hounds! You can bet anyone and everyone who has a 401(k) will be treed by insurance dogs attacking them with the annuity spiel.

Hidden out of site will be their high fees, high surrender charges, and dependency on the solvency of the insurer. No thanks!

Think you’ll understand what you’re buying? Please. The prospectus is about as clear as the tax code.

401(k) investors beware. I’ve never liked a business model that benefits when you die.

OK, then. The other bad news in this pathetic Secure Act is the elimination of the stretch IRA.

A stretch IRA works like this; Let’s say you have an IRA, your wife is your beneficiary and your two children are the secondary beneficiaries.

When you die, your wife takes the required minimum distribution (RMD) on her life expectancy.

Then, when she dies, the kids get it and it’s distributed based on their life expectancy, usually a long time, say 30-years. This long payout allows your children to avoid a massive tax obligation over a short period of time.

That’s gone.

The Secure Act eliminates the secondary beneficiary “stretch” or life expectancy RMD and defaults to 10-years.

That’s it.

You can imagine how this plays out.

Your kids are maybe in their prime earning years and inherit the IRA. They’ll have to clear it out within ten years.

I would make sure you have a conversation with your wife to explain how this works, and then explain to the kids that they will need to be ready for a potential windfall that will show up as taxable income.

Strategies?

There will be many.

My idea is to maybe take all of it over three to five years when the kids can somehow live off dividends and cap gains and drop their income as low as possible.

And the good? Hmmph. There’s a couple crumbs I guess. The RMD age goes from 70 1/2 to 72. Big deal. And there’s no age limit on IRA contributions. Not that you’re going to be contributing much in retirement.

Basically, the Secure Act is a stealth tax and a fee grab courtesy of your elected bozos in Washington and the insurance lobby.

The following two tabs change content below.
  • Bio
  • Latest Posts
My Twitter profileMy Facebook profileMy Instagram profile

E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com
My Twitter profileMy Facebook profileMy Instagram profile

Latest posts by E.J. Smith - Your Survival Guy (see all)

  • RECONSTRUCTION: The Confiscation of All His Property - April 13, 2021
  • Inflation? Yes. - April 13, 2021
  • FORENSIC REPORT: Major Miscounting in Michigan. NH Next? - April 13, 2021
  • Demography Is Destiny: You Will Rise and Stand - April 12, 2021
  • Fidelity Investments #1: Hires 4,000 Focuses on YOU - April 12, 2021

If you enjoyed this post, email it to a friend:

  • Email
  • Print
  • Facebook
  • LinkedIn
  • Twitter
  • WhatsApp

Related Posts

Trending

  • Be Dangerous: Biden’s Progressive Puppeteers’ E.O. Gun Grab
  • Biden Tax Hikes: I’m Here to Help, But Only if You’re Serious
  • One Word Explains the Worth of Your Neighbors’ House
  • Constitutional Carry: Another State Chooses Second Amendment Freedom
  • April RAGE Gauge: Are Your Bond Funds Dead or Alive?
  • You Need To Be Dangerous: Democrats Want You Harmless
  • It’s as Simple as 4%? No, Not Anymore
  • Your Survival Guy Stock: Witness This Dividend Miracle
  • You're Telling Me Friends Ask You This Question
  • Why Your Life Before COVID Isn’t Coming Back

YOUR SURVIVAL GUY MUST READS

  • Be a Shepherd. You’ll Be Happier. Greed Kills
  • Escape the City: Live Small, Cheap, and Safe in America
  • Friday Night Shoot with My Kids
  • At Age 90, He’s Compounding Some Big Numbers
  • Be Prepared for Another Great Lockdown, Recession, or Reset
  • Disaster Prep in Our Newport Bunker and Your Survival
  • Why Vanguard is too Big: Part II
  • Stocks: Are You Sticking Your Neck Out Too Far?
  • Do You Remember When You Purchased Your First Home?
  • Buying Time When You Need to Flee
Only if You’re Serious
See Who's Missing the Boat
Pandemic Creates Virtual Panopticon
Emergency Water Storage
Find Freedom in America
Second Amendment
Smith Family Robinson
Great Reset
Financial Independence, Retire Early
Richard  Young Reports
How You Can Save Money for Your Grandchild
Why Fidelity is Number One
The Best States for Survival
You Invest, They Win
Escape the City
Why Vanguard is Too Big for YOU
Money 101
Island Life

Copyright © 2021 | Terms & Conditions

loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.