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The Tax-Free-Money-Machine

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Secure Act Sales Opportunity for 2020

The Good Thing:

One of the good things about the Secure Act is the owners of qualified plans don't have to take RMD's out until age 72.

The Not So Good Thing:

One other aspect of the Secure Act is that there are no longer any stretch IRA's available for non-spousal beneficiaries. (Note: there are some exceptions) If you leave the money in a qualified plan to your children or anyone other than your spouse, they will have to LIQUIDATE THE MONEY IN 10 YEARS AND PAY ORDINARY INCOME TAXES ON IT. Prior to the Secure Act, they could have taken a lifetime to do so.  Many of the non-spousal heirs (generally adult children) will also be at their peak earning years when this happens and will end up paying taxes on their inheritance at the highest rates that they qualify for. Aside from the fact that the Qualified Plan Money is already subject to ordinary income tax rates, the accelerated 10 year liquidation requirement will make that aspect (higher taxes) even worse. 

Easy Solution:

Take any future excess money from the qualified plans now, generally on an annual basis like an RMD, purchase a low cost Guaranteed Premium, Guaranteed Death Benefit Life Insurance policy that has both Critical and Chronic Illness riders, included at no cost, of which the benefits are all income tax free to both the insured currently as well as to the future beneficiaries. See Below: