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Retirement Income: God’s Secure Act

Finishing Well / Hans Scheil
The Truth Network Radio
January 11, 2020 8:30 am

Retirement Income: God’s Secure Act

Finishing Well / Hans Scheil

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January 11, 2020 8:30 am

The Secure Act was passed in Congress at the end of 2019. It changed a few things related to retirement, including Stretch IRAs. Stretch IRAs now have to be emptied after 10 years. Hans and Robby go through what this means, how it affects you, and even strategies to put into place so you can avoid ever worrying about this! It is all for your family.  

Don’t forget to get your copy of “The Complete Cardinal Guide to Planning for and Living in Retirement” on Amazon or on for free!

You can contact Hans and Cardinal by emailing or calling 919-535-8261. Learn more at  

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You're listening to the Truth Network and Welcome to finishing well brought to you by Cardinal God Certified financial planner belonged to Schild and best-selling author and financial planner helping families finish well over 40 years of finishing well will examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Medicare IRA long-term care life insurance and investments and taxes.

Now let's get started with finishing well cited here in finishing this title got me intrigued. If nobody else called God's direct eye quote.

You may know, Congress just passed us secure acted so literally where I'm sitting here with financial planner and certified all sorts of stuff on Schild in the house to show you know we were just talking you and I you know what is God's secure act. He knows where talk about what you and obviously the government wanted this sharp social security and Medicare and always sing so they came up with a secure act, what God talk about secure so was at Stanford setting every community for retirement something SEC you are and I mean some of the sets communities up for retirement. Some of it not so much but it's a law now and so were talking about and what were really talking about it, really.

We talked about last week. We can talk about this weekend. Next week is the effect of the secure act and so will we talk about this episode today is about how it eliminated the secure act passed by Congress eliminated the stretch IRA for beneficiaries so the effect that's going to have on our listeners is you need to rethink some your estate planning. So, coming up with the title of the show today, put it back to you now. Yes, we let you know what is that look like for God and in you know, we began to talk to each other what what what you think God would want is as far as us planning for our legacy our footprint. You know with our children what what what they want and so I went back to the you know what a God have in mind for his children. Israel and I will stop Thomas in Leviticus 2020 forward said, but I said to you, you shall inherit here. It was pretty clear. It was like you my you know if you do get it it says you shall inherit their land and I'll give unto you, and possess.

It's a land that flows with milk and honey, and as I think about my own kids.

I mean, I realize Christ is our inheritance and his number one all that stuff but I mean, practically speaking, I would love for my financial footprint for my family and I know it was my father's desire that they would yell essentially live in the land of milk and honey that they would they would feel like they were well taken care of and well you know that's part of being a father. It was that milk and honey in tax notice and that I know my dad you know that was a big deal to him and I really want to learn from my dad. You know III think that was a good value that it to him.

He wanted to leave that financial footprint for all of us. It was always on his art at.

However, when I look at it now, he did leave the milk and honey. But there was tax involved because of the RA cure was for what he did know right in just this stuff is difficult to understand even going through the secure is about a week ago I sent Rob your two weeks ago I sent him all the facts on the secure act as written up by a slot and didn't give him a lot of explanation. This is going to talk about and divide this up over a few shows. This stuff is confusing.

So to give her father a break here for him to understand it at that level. He just knew what he wanted to leave right. He didn't really understand the ramifications.

All I know his heart was absolutely wonderful towards all of us and lavish. You know, and I thought I fully believe that God guides that way that he wants us to to live a life that were secure that we know it wouldn't have what we need in order to carry out his purposes for life and I would really like my kids to know that same thing that they'll have what they need to carry out God's purpose for their life and part of that.

I love what your dad did you know where he helped you with your education and ill yeah well and have a desire to do that for my grandkids that are yet to come in really doing that for my kids is to I was fortunate enough in my 40s to really make some significant income for my job and I was think I was smart enough to know that if I didn't put that away somewhere I was, and blow it all and so I stuck a lot of it into 529 plans. So when I've gotten into my 50s now my 60s and I'm still educate my kids. I got a nice big tax free bank accounts to do that from and I'd like to set up my kids and grandkids in the same fashion really putting a value on education. I know what it's done for me and so the cool thing that I see is you know if you're listening to the show and God has provided for you.

You know somebody who would really like to see you take full advantage of of leveraging the resources that you have to maximize the the division you know is is is is Hans and I were talking Isola now it's up to you what your values are what what you value. As far as how you want your inheritance to look like for kids. It's up to me then just in a process. How would be the most effective way to do that.

An understanding is correct in support of until I know what you want to do and really why you want to do it to get really close with you. I'm not can try to put my values upon people and clients and you. I need to learn what your values are in then I'm a show you the most effective way that I know to do that and so what what what were talking about today is the next series of benefits or tax benefits or the opposite of tax benefits, taxes that are coming with the secure and so were talking about estate planning and life insurance today and is secure act which was to sign by the president, passed by Congress is now the law is eliminated the stretch IRA and I'm jazz out west of you yet.

Well I hope now that I've not wanted to tell me what it is for FL like a stretch to me and we really have a story in my book would sure couple of couple of folks brother and a sister that I've known since I was a kid and their father was our insurance agent of our family way back when and when their mother passed away she left two pretty sizable IRAs to both of and I did their financial planning and help them with their inheritance and in the brother in the day. These folks are in my book and the brother and the thing he basically use the money to start a business which is real noble, but most of the monies gone and he paid a whole bunch of taxes to get the money out of an inherited IRA because he really wanted to get the principal to invest in the business and the that the daughter the lady in the search, she elected to use the stretch IRA that's now gone. It's protective for her because all the people before this act for deaths that occurred prior to this. There they can benefit by the old wall, but she stretched the payments out in the taxes. Essentially, over her whole lifetime. So by putting $600,000 into the into a inherited IRA and putting it into an annuity she's guaranteed $30,000 a year for the rest of her life and she was is 56 years old when her mother died she very well could live into her 90s and that's gonna be a substantial thing for her and then she pays taxes each year.

Based upon that $30,000 that's coming into now. This new secure act is eliminated. That is an option, so it's just so it any deaths from this point forward. If people leave their children, are the beneficiaries or some other beneficiary brother sister anybody that's not a spouse is left the money in an IRA you can no longer stretch that over your lifetime. You can deal the whole thing needs to be emptied within a period of 10 years as an and then but it would seem to send this back to check out the beneficiary on our IRAs and and you had mentioned that Pete that some people have a trust as the beneficiary there.

I am a really need to take a look at that because their plan is no longer set of what you find most of those trusts me.

I go through training every year in the course to use an attorney sent one of those up, but I trust is used.

To effectively force your kids to take advantage of the stretch so that if the mother had set up a trust as the beneficiary. It's really her two kids.

This son and the daughter would still be the beneficiaries of the trust, but it would mandate the stretch okay so that's that's really what the trust do is they they only allow the kids to take what is the stretch out over the lifetime payments and it is a way to manage money from the graves, essentially. And so if you got a trust is your beneficiaries time to review is time to take a look at it yet because this is had a big effect on inherited IRA money unless it's from your spouse get back to some you told me actually. Many times now that you feel like if one of your clients is giving you their resources to to manage if they pass away with money in an IRA. A traditional IRA you feel like you haven't met your obligations yet significant money on, and especially if they pass away late after I've been doing this for many years. I mean, if you've got somebody in IRA and your managing their money and they left the kids are beneficiary and they died two years later there there there really isn't a lot of responsibility on my part for that but point well taken. Is is that an IRA. A traditional IRA is not a very effective means of transferring wealth to the next generation. It's a very high tax we did.

In other words, it isn't usually gonna be part of God secure act if if you really are planning with what the possibilities would be with that particular resource which, when we come back in on the second segment will will dig more into that. We want to let you know that you're listening to finishing well, a certified financial planner Hans Schild today show, which we talked about actually estate planning and life insurance. It's under the life insurance tablet Cardinal course he can get that chapter for absolutely free of REE free if you just go to cargo and click on that chapter, which undermines up with a book in the workbook. The complete Cardinal guide to planning for and living in retirement, which is Hans but they raised his spread the wealth of knowledge that is available after today show, which is God's secure act will be back in just a minute Hans and I would love to take our show on the road to your church, Sunday school, Christian or civic group.

Here's a chance for you to advance the kingdom through financial resources and leveraging Hans expertise and qualified charitable contributions veterans aid and attendance IRA Social Security care and long-term care. Just go to cargo and contact Tom to schedule a live recording of finishing well your church Christian or civic group contact Tom Cardinal that's Cardinal welcome back to finishing well, a certified financial planner Hans Schild today show is God's secure act of that title, but it you know Honda I really think it would be a benefit to the listeners to hear. My dad had.

I think it was in in the neighborhood of $400,000 in an IRA money that was a traditional IRA but actually went to my siblings because he had had of my inheritance a bit different than theirs. At at and so is it word when they got those even if they chose the stretch and I have a brother-in-law who is a CPA and I'll bet you anything you did choose to stretch our Amy is able to do that consists directly affected them as my dad passed away March, but yet had you instruct started instructing my dad about 10 years before you know you met him what what might you've been able to help me when we got something like $400,000 sitting there is if we go to 10 years before.

Maybe if you give me a little license maybe 15 years before 20 years before he would abandon his low 70s okay and it probably wasn't 400,000, then maybe it was only 300,000 maybe was funny because he took minimum distribution Deal with 400 we could've sat down and written your dad a $400,000 life insurance policy that would've had a premium of about 20 grand a year, maybe 15 grand your arms up on the side of my head, and you say will what in the world would he want with life insurance and his low 70s well me if if the money is just sitting there in a taxable account. Had he bought a $400,000 life insurance policy 15 years ago, he would have had the policy in force when he passed away and then each one of your siblings would've gotten his three other siblings now there's 44 okay so each one of them would've gotten $100,000 payment from the life insurance company would come much quicker to point they would had no tax implications because life insurance comes tax free to the beneficiaries. So I mean no tax.

Nothing. Where is they each got $100,000 and they have a choice to make and they each could make different choices if they wanted all the money right now. That whole hundred thousand dollars got added onto their other income for this year say they made 40 grand a year now.

Their income went 240 grand a year.

Tax rates are much higher on hundred 40 grand and they are in 40 but just for the sake of simplification 30 or $35,000 of that hundred thousand dollars would've been gone, income taxes, he would not only have been able to give them more money, which he did to me which defeat if he asked what he would have been $40,000 in sure that what happened, Eddie passed away earlier, it would've even been more concerned that all that other Ironman Eric IRA money that had been paid on the premiums of the life so sure this be something left in the IRA so they would've gotten both but the whole principle is is an IRA is not really very good vehicle to leave to your children unless it's a Roth now Roth IRA is much better because of all $400,000 of that money would been Roth.

Then they would note any tax on their hundred thousand so this gets back to the statement we made at the beginning of the show actually where I sit you know that God wanted his children to inherit a land flowing with milk and honey and and you mentioned but no tax. And again I weep when I examine taxes don't need to be paid and all that kind of thing.

But it is a matter of maximizing your resources for the ability of of of your children obviously have what they need to head your dead dead done this life insurance thing 15 years ago, he would've had pay taxes on that money coming out that he used to pay the life insurance premium you pay taxes on your IRA anyway you shake it says they can be paid right now through a Roth conversion or for distribution early to be paid out over time during your lifetime in smaller amounts or they can be borne by your children when they receive an inherent cancel what were talking about today is the secure act, which just became law. Beginning of this year and for any deaths that happen from now on you knocking to be able to do the stretch out the tax thing to be the whole IRA list your spouse to anybody other than your spouse as the beneficiary. They're going to have to empty that thing pay the taxes within 10 years of your death.

So I'm thinking personally and on but have this friend unfortunately who is in a nursing home on Medicaid and and I watch him suffer every time I go visit them in every time I see that I go oh man, I just can't, might, I cannot picture my family having to put up with the Guild of me having to be in a place like that and and and and that whole picture and at and so part of leaving my family in a milk and honey is not leaving them with a whole bunch of guilt about how dad was take care of the last 10 years of her life so I could do something similar.

Rather than have a term life insurance policy. What you described. I could do one of these hybrids right where I could go sure meeting and so if we go back to the example with your dad get some business in the early 70s today. They got up $400,000 IRA. The reason we need. The IRA is the example of taxes can be paid by the beneficiaries of death and we also need to come up with the premium for the life insurance so knowing in your dad's example, we we would had to pull out minimum distributions of about 16 grand a year anyhow and all I'm suggesting is is maybe we would pull out a little more pay the tax and then with what's left put into this life insurance policy that can be paid up in your late 80s and is going to have a $400,000 death benefit in which you just brought into the equation.

Most of the modern policies we can put a long-term care rider on just basically allows you to access the $400,000 death benefit will you're still alive to pay for either home healthcare or an assisted living order pay for your care anyway.

We just take about my friend and I was like I can get off my mind. Honestly, is he is is kids.

He's totally blind. And so it you know and based on his other illnesses. There is no way in the world that his kids can manage his care. They can't he's big I am. There's a lot of stuff going on within that family. That makes it absolutely impossible.

He did have long-term care insurance, Medicare doesn't pay for.

The only thing he got into his attempt. Essentially, this Medicaid nursing home for you.

It's can be different because as long as you keep this life insurance policy in force, which, by the time you get up there in the years you can pay for the Social Security check. If you have an ongoing premium as long as this thing stays in force you to be able to get a check every month for a little piece of the death benefit every single month.

I just only want to think about what that that family is taking on in the way of guilt over having their dad in that situation at an you know his thoughts always was. My kids are going take care of me. That's what so many I would think, but that there just comes a time when you and you've seen this movie a few times, but is So if we get back to the beneficiaries and were you know were were you used to be able to use the stretch IRA concept that no longer is available but frankly not that many of the kids did any because when people inherit money at midlife, or late midlife and just depending on how old you are or you you kids are when you die if they're the beneficiary.

Most of just cash it in and they pay a huge tax bill and my point is that can be avoided simply by using the Roth concept, a Roth conversion or purchasing life insurance and then which you added in is the life insurance can be added to it. A long-term care benefit that really just allows you to get the death benefit will you're still alive it's called a living I and so, from my standpoint. The cool thing is if I mail get taken out the middle and I like it but actually I don't want to go into a long-term care situation anywhere in our something happens ride I pass away immediately. Then all the resources were leveraged not to go so that my family will live a milk money came out and be able to have been affect the kingdom in essentially from that. But if I do, you know, it's kind like from my standpoint the best of both worlds and that is why they call it a hybrid artist will yeah hybrid is mixing two things together and making one end of life insurance, long-term care, hybrid was really created by the same kind of tax legislation is created by the life insurance companies, but it was made possible by that you can get these long-term care payments out of a life insurance death benefit their tax-free that say somebody doesn't have children or say their values are different than my values and and and they want their church to receive the maximum benefit of all their resources. How does that change things so they can still mean they probably more than the people with children. They need the long-term care benefit. So a lot of those folks end up buying long-term care insurance straight up because they they really have no need for a payment after death early, say things for people who plan to and want to leave money to the church which allowed people with kids and without kids want to leave some of their money to the church. You can set up one of these life insurance policies were the church or the missions are a mixture of missions are the beneficiary and the beneficiary has no rights to anything until you're gone. So that life insurance policies owned by you and has a long-term care benefit.

So you keep the money you have it there. It's available to pay for your long-term care and then if you pass away without using it or using all of it, then the remainder goes to all the beneficiaries there list right so God's secure act right like the beautiful thing is that he gave us all free will to sit there and all of these are our values and this is the footprint that I want to leave you know in my legacy financially for my family and and and for those things. One of the things that we keep coming back to I think you really have taught me is the how critical it is to know who your beneficiaries are on your IRAs on your life insurance paths, but always different things and check those regularly, especially now it is correct absolutely at slot brings this up in every meeting several times and I write it down every time he brings it up and I bring it up with every client that comes into my office going get out the pulses.

Let's look at list is not assumed because just I could tell stories all day about some of the stuff that people discovered because I insisted upon today shall life insurance estate planning. It's right don't forget the guides put cardinal you can get the chapter on life insurance and estate planning for free. Just download the PDF or you can email Hans, tell me what the whole book, the complete cargo guide to planning for and living in retirement. I mean how fun to be able to intercede in and just talk about in a bring out the open and let you know what what what what what I want my kids inheritance to look like you know that's some I really hadn't some some talk that with your family. Things you we hope you enjoyed finishing well brought you by cardinal visit for free downloads of the show previous shows on topics such as Social Security, Medicare and IRAs, long-term care and life insurance, investments and taxes as well as constant best-selling book, the complete cardinal guide to planning for and living in retirement and the workbook once again for dozens of free resources past shows get Hans book go to Cardinal if you have a question, comment or suggestion for future shows. Click on the finishing well radio show on the website and send us a word.

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