The New Tax Laws and Older Americans

Working together on their budget

There has been a barrage of changing and conflicting information about taxes lately. The passage of the SECURE Act in late 2019 and the more recent CARES Act have created significant issues that impact tax and estate planning for Older Americans.

Of course, everybody has a different perspective and should discuss their personal situation with their advisors. Here is some of the information that we have been sharing with our UMC residents and friends:

  • No one has to take the required minimum distribution (RMD) from their IRA in 2020.
  • If you have taken some already this year, so long as it is back in your IRA by August 30th, there is no penalty.
  • You can still direct gifts to charity from your IRA custodian without penalty. The Qualified Charitable Distribution (QCD) remains in effect and is a tax efficient way to make charitable gifts.
  • Historically, individuals who inherited an IRA could take these taxable distributions based on their individual life expectancy. Now, except for spouses and a few other groups, any IRA beneficiary must take the entire, fully taxable distribution within 10 years.
  • Naming a charity(ies) as the beneficiary of an inherited IRA eliminates any taxes and creates new tax strategies to benefit heirs.
  • Finally, for 2020, individuals who have substantial medical expenses, may save tax dollars if they itemize. The threshold for the deduction has been lowered from the excess of 10% of adjusted gross income (AGI) to the excess of 7.5% of AGI.

This is a sampling of substantial tax changes that impact Older Americans. It is part of a discussion that every individual should have with his or her own advisors.

If you’d like to make a Qualified Charitable Distribution (QCD) to help us further our mission of service and caring, please contact our Foundation office at 732.731.2121 for more information. Thank you.

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    205 Jumping Brook Road
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    Phone: 732-922-9800