Nerd Notes!: Clarity on 10 Year Rule with Non-Spouse Beneficiary IRAs and Roth IRAs
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- In 2020 the SECURE ACT changed Beneficiary IRAs and Roth IRAs for non-spouse beneficiaries in which they were no longer allowed to take lifetime RMDs and "stretch" the withdrawals and taxes over the lives and now only had 10 years to fully withdraw the account.
- However, there was never finality or clarity as to whether clients need to take annual RMDs each year in a Beneficiary account, or not?
- We now have clarity and starting in 2025, for Beneficiary Roth IRAs or Beneficiary Traditional IRAs, if the account owner passed away was after the RMD age (ie. post age 72), the new beneficiary needs to take annual RMDs and fully withdraw the account by the 10th year. If the account passed away owner was before their RMD age (ie. before age 72) , the beneficiary doesn’t need to take annual RMDs and but still needs to fully withdraw the account by the 10th year. Note: the actual RMD age can vary based on which year one was born)
- For example, if someone died in 2020 for example, and the prior account owner was past their RMD starting age, the beneficiary who has not been taking RMDs yet, will need to start that in 2025 and fully satisfy it by 2030. For any clients who have not been taking annual RMDs yet, no worries, they just need to know they need to start in 2025.
- For example, if someone died in 2020 for example, and the prior account owner had not reached their RMD starting age, the beneficiary who has not been taking RMDs yet, will not need to start annual RMDs in 2025 and will just need to fully withdraw the account by 2025
We will be proactively reaching out to clients who this may affect. If you have any questions in the interim, please contact us at 410-600-PLAN
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Klik TV Episode 67: Managing Financials with Offit Advisors
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Check out this enlightening conversation with Financial Planning experts Ben Offit and Sophia Trakhtman from Offit Advisors. In this episode, Ben and Sophia share valuable insights on various aspects of financial management. Whether you're new to financial planning or looking to refine your strategies, this video has something for everyone.
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Ben Takes in the Sights (and Suds) in Beautiful Wyoming
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Ben spent the July 4th holiday in "Big Wyoming", catching up with childhood friends, and enjoying some rest, relaxation, nature, and fun in one of the most beautiful parts of our country.
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OA Client Launches Moola! Bringing Helpful Tips & Tricks to Consumers
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One of our clients, Jason, has launched a site called Moola! Jason is ALWAYS talking about the myriad of ways to get more out of a dollar from credit cards, shopping, travel and more – and this is an outlet for that passion where he wants to help teach others. Make sure to check it out! |
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Words of Wisdom from an All-time Tennis Great
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If you have a few moments, this commencement speech by Roger Federer is well worth the watch/listen. Federer is not only an all-time great athlete but also a truly great speaker, drawing from his tennis career to share his wisdom about life with Dartmouth's graduating class of 2024.
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Chipotle executed a 50-1 stock split last week, bringing its share price from roughly $3,200 to $63. The fast-food chain priced its shares at $22 when it debuted in 2006!
Yahoo!Finance, June 25, 2024
In 2023, America’s millionaire population grew by roughly 500,000, or 7.3%, to 7.43 million people. The number of Americans worth $30 million or more grew 7.5% to 90,700 while their fortunes surged to $7.4 trillion.
CNBC, June 7, 2024
Growth stocks' outperformance versus Value is now at its highest level since 2000. What happened in the seven years following July 2000? Reversion to the mean. Growth stocks declined 27%, while Value stocks gained 84%.
Charlie Bilello, June 18, 2024
About half of the population aged 65 or older live in households that receive at least 50% of their family income from Social Security benefits.
FAS, Dec 16, 2022
The price of postage stamps went up for the second time this year and for the fifth time in 24 months. The 5-cent increase for First Class stamps ties the record for the biggest hike ever. However, adjusting for inflation, the price of a stamp has held fairly steady for the past 139 years.
Axios Markets, July 15, 2024
Two-thirds of the world’s population now live in countries where the birth rates have dropped below 2.1 babies per woman, which is the number needed to keep the population constant. Researchers now expect the global population to peak at about 9.5 billion people in 2061 and then start falling. That would be the first such global population decline since the Black Death in the Middle Ages.
The Week
“If at first you don’t succeed, then skydiving definitely isn’t for you.”
- Steven Wright
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Seven Timeless Investing Lessons from Jack Bogle
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Today we are going delve into seven timeless investing lessons from Jack Bogle, the founder of Vanguard and a champion for sensible investing and a legend in my industry. These lessons are quite similar to the previous wisdoms we shared from Warren Buffett and Charlie Munger, but each expert has their own perspective and twist.
Here we go:
1. No one rings a bell at tops or bottoms. Market timing is a futile endeavor. Even seasoned professionals can't consistently predict when the market will rise or fall. Bogle emphasized that the best approach is to invest consistently over the long term, rather than trying to chase short-term gains. For example, the S&P 500 has repeatedly hit all-time highs, even when valuations seemed stretched, proving that timing the market is difficult.
2. When in doubt, be conservative about assumptions. Bogle suggested erring on the side of conservatism in your financial planning, ensuring your investments align with your risk tolerance. This means being realistic about your expected returns and making sure your financial plan can withstand market fluctuations. For example, you could assume a lower rate of return to ensure that you save enough to meet your goals.
3. Lengthen your time horizon. The longer you invest, the less impact short-term market volatility will have on your overall returns. Bogle encouraged investors to think long- term, recognizing that time is a powerful ally in the investing journey. For example, if you start investing in your 20s for retirement, you have decades to ride out market ups and downs.
4. Stick to a good plan. The pursuit of the "perfect" investment plan can be counterproductive. It's more important to have a solid plan that you can adhere to consistently. Bogle advocated for simplicity and discipline in investing, emphasizing the power of steady contributions over time. This means creating a diversified portfolio that aligns with your risk tolerance and financial goals, and sticking to it even when the market gets turbulent.
5. Don't chase the past. Past performance is not indicative of future results. Chasing hot investments often leads to buying high and selling low. Bogle advised investors to focus on diversification and avoid the temptation to follow the latest trends. The ARK Innovation Fund, which experienced a meteoric rise followed by a significant decline, illustrates the dangers of chasing performance.
6. Buy the haystack. Trying to pick individual winning stocks is a daunting task. Bogle suggested buying the entire haystack by investing in a broad market index fund. This approach ensures you own a piece of all the major companies, including future market leaders. For example, the S&P 500 is heavily concentrated in a few top holdings like Apple, Microsoft, and Amazon. By owning the entire index, you automatically benefit from the growth of these dominant companies and the newer entrants like NVIDIA.
7. Just stand there. When markets experience downturns, it's natural to feel anxious. However, Bogle's advice is to "just stand there". Don't panic sell, as this can lock in losses and derail your long-term goals. Instead, stay invested and continue contributing to your portfolio. Market downturns are a normal part of the investing journey and can even
present opportunities to buy at lower prices.
By following these timeless lessons from Jack Bogle, you can navigate the complexities of the financial markets with confidence and increase your chances of achieving your long-term financial goals. Enjoy the summer!
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2024 Mid-Year Market Outlook
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S&P 500 Index is an unmanaged group of securities considered to be representative of the stock market in general. You cannot directly invest in the index.
Dow Jones Industrial Average - The Dow Jones Industrial Average is a popular indicator of the stock market based on the average closing prices of 30 active U.S. stocks representative of the overall economy.
NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market. Today the NASDAQ Composite includes approximately 5,000 stocks, more than most other stock market indices. Because it is so broad-based, the Composite is one of the most widely followed and quoted major market indices.
Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index which includes the 3,000 largest companies in the U.S., based on market capitalization. As of the latest reconstitution, the average market capitalization was approximately $762.8 million; the median market capitalization was approximately $613.5 million. The largest company in the index had an approximate market capitalization of $2.0 billion and a smallest of 218.4 million.
Russell 1000® Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.
Russell 1000® Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.
Government bonds are guaranteed by the U. S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value.
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Securities offered through Kestra Investment Services, LLC (Kestra IS), Member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Offit Advisors is not affiliated with Kestra IS or Kestra AS. Offit Advisory Services, LLC is a tax firm but neither Kestra IS nor Kestra AS provide legal or tax advice and are not Certified Public Accounting firms.For more information on the Five Star Wealth Manager and the research/selection methodology go to: www.fivestarprofessional.com. Investor Disclosures: https://bit.ly/KF-Disclosures
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