Kevin’s Peace of Mind
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Learn the Facts and SECURE Your Assets What Does the SECURE Act Mean for Your Retirement?
In my monthly newsletter, I usually like to share stories about my family and friends so my clients can get to know a little bit about me outside of my practice as an attorney. However, a new law went into effect recently that will have both positive and negative impacts on my clients and our families. So, I decided to set aside this month’s issue to talk about the highlights of this new legislation called the SECURE Act. The SECURE Act stands for Setting Every Community Up for Retirement Enhancement and took effect Jan. 1, 2020. It’s one of the most significant pieces of retirement tax legislation since the creation of the Roth individual retirement account 20 years ago. The SECURE Act makes some changes to the 401(k) and IRAs, but it also leaves some things the same. Taxes will always go along with retirement plan accounts — Roth IRAs being the exception. Income taxes apply when you withdraw from your retirement account and when you leave your retirement account to your nonspouse beneficiaries (i.e., children or grandchildren). However, if your spouse is your beneficiary, nothing has changed. They will still be able to rollover your accounts into their own, tax free, and start taking mandatory distributions when they turn 72. The biggest change to come with the SECURE Act, at least for my clients, involves tax choices for nonspouse beneficiaries. Before the new rules went into effect, if your child, grandchild, or revocable trust inherited IRA or 401(k) money from you, they had the tax choice to either accept the whole lump sum of the IRA or 401(k) proceeds and pay income taxes on Here is what the SECURE Act does not change —THE TAXES.
the whole thing or choose to stretch out the payments for a period of time — even their lifetimes. They could still continue enjoying the tax-advantaged status of an IRA for several decades. If your revocable trust was a beneficiary, those designated as beneficiaries of the trust could also enjoy asset protection. This type of account was called a stretch IRA. The SECURE Act has eliminated the stretch IRA. Your children, grandchildren, or the beneficiaries of your revocable trust can’t stretch payments over their life expectancy anymore. Now, if we leave IRA or 401(k) proceeds to our children, grandchildren, or revocable trust, they’ll have to either choose a“lump-sum payment”and pay taxes on it or stretch out payments for no longer than 10 years. Since naming your children, grandchildren, or your revocable trust as a beneficiary will not change the taxes under the SECURE Act, the real question to ask yourself is this: If the answer is very important, then it’s essential to name a revocable trust as the beneficiary of your retirement plan. If you establish a trust, your kids and grandkids will still have to pay taxes on the full amount within 10 years. But with a trust in place, they can take their minimumwithdrawal, pay taxes on it, and then put it right back into the trust to ensure protection in the case of any legal problems the beneficiary may have, including a divorce. At a recent conference I attended, a family lawyer spoke. He asked us this question: “What do estate planning and divorce lawyers have in common?”The answer was that estate planning attorneys work on establishing trusts so that in the event of a divorce, their clients are How important is asset protection for my beneficiaries (children or grandchildren)?
protected from the lawyers who represent their soon-to-be ex-spouses. That family lawyer said he knows trusts work because, in his career, he saw that trusts always protected every last dime of that inheritance. As an estate planning attorney, protecting inheritance is always my goal. If you’re my client, you probably already have a revocable trust, and you have most likely named your trust as the beneficiary of your retirement plan. Your main purpose for doing this was to protect your retirement account for your surviving spouse, children, or grandchildren. If you’re not my client, now is the time to get that ball rolling. If you care about protecting your assets for your beneficiaries, then you need to start a revocable trust to ensure the legal protection of your retirement plan as well as all assets when something happens to you without ever giving up ownership during your lifetime. The SECURE Act will unroll the most significant changes to retirement legislation we’ve seen in at least a decade. Make sure your plan is up to date to protect your family.
-J. Kevin Tharpe
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RETIRE IN STYLE 3 PLACES TO RETIRE INTERNATIONALLY
Even if you’ve always planned for a comfortable retirement in the United States, choosing to live internationally could be a smart alternative to improve your standard of living in retirement. International Living Magazine’s Retirement Index has tracked objective retirement metrics — like the cost of living, democratic stability, and health care — for the last 40 years. They also take into account reports of correspondents actively living abroad. Here are some of their top picks for international retirement destinations. PANAMA Panama ranks No. 2 in International Living Magazine’s list of best places to retire internationally. With its tropical climate, proximity to the United States, excellent health care, and low tax burden, it’s easy to see why. In Panama City, you can expect to pay at least $2,600 a month in living expenses, but housing costs are substantially lower outside of major metropolitan markets. Panama also offers excellent discounts, up to 25% off of things like airline tickets, hotels, and energy costs through its Pensionado program. COSTA RICA If it’s a textbook paradise you’re looking for, look no further than Costa Rica. Thanks to a 1948 decision to abolish their military and direct
all of those funds to health care and education, Costa Rica is often referred to as the “Switzerland of Central America.” Known for its stable democracy, safety, and socialized health care that’s only available once you’ve obtained residency, Costa Rica also offers climates for just about everybody — from the lush jungles of the south to the hot, dry beaches of Guanacaste in the northwest. Expect to find large communities of expats to help you acclimate. MEXICO The first things that come to mind for most people when you mention Mexico are margaritas and beach umbrellas, but this country offers a lot more than that. For starters, Mexico features an enticingly low cost of living. International Living estimates a couple could live in Mexico on anywhere from $1,500–$3,000 per month, depending on location, including health care expenses. Once you’ve obtained residency status, you can sign up for national health care plans that offer full coverage for just a few hundred dollars annually.
THE FIGHT OF THE CENTURY How a Battle of Boxers Captivated the World
On March 8, 1971, all eyes were on the world of boxing as people watched what would become known as “The Fight of the Century.” It was one of the most anticipated matchups the sport had ever arranged: Current heavyweight champion Joe Frazier and former heavyweight champion Muhammad Ali were finally facing off, the first time two undefeated boxers would fight each other for the heavyweight title. Spectators were hungry for a battle. Both fighters held rightful claims to the title of world heavyweight champion. Ali won it in 1964 and successfully defended it for several years, but he was stripped of the title during a legal battle over his induction into the U.S. armed forces. In his absence from the sport,
Frazier earned two championship belts through major knockout fights. But when Ali settled his court case and came to reclaim his title, Frazier wasn’t ready to give it up easily. Ringside seats for the fight sold for today’s equivalent of over $1,000. Millions watched the broadcast in over 50 countries around the world, and Madison Square Garden sold out to a crowd of 20,455 spectators. The fighters possessed polar opposite tactics, backgrounds, and social impacts, but when it came to skill, they were evenly matched. The fight captivated the nation. As Sports Illustrated put it at the time, “The thrust of this fight on the public consciousness is incalculable. It has been a ceaseless whir that seems to have grown in decibel with each new soliloquy by Ali, with each dead calm promise by Frazier.” The fight exceeded all expectations with a fully engrossing 15 rounds. For the first quarter of the match, it seemed Ali would best his opponent, but Frazier came back with fury. Even though Ali continued to rise to his feet round after round, Frazier emerged victorious by the slimmest of margins, dealing Ali his first professional loss ever. The landmark event highlighted an unforgettable night of skillful prowess like the world had never seen. Even though the title fight was only the beginning of the rivalry between the two boxers, the matchup rightfully took its place as one of the greatest fights in the history of the sport.
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TAKE A BREAK
One of the greatest things about March Madness is that you don’t have to be a huge college basketball fan to get in on the fun. Kids of all ages can fill out brackets — or have a parent fill one out for them — and watch their picks duke it out on the court. While healthy competition among family members WHOSE PICKS WILL GO ALL THE WAY? March Madness Fun for the Whole Family
can be fun all on its own, check out the following tips if you’re looking to go the extra mile and reap as much fun from March Madness as you can.
TURN EACH GAME INTO AN EVENT. Not every kid may like watching basketball, but if they fill out a bracket, then they might gain at least a passing interest in who will win each game. To elevate their interest, turn
PESTO CHICKEN WITH BLISTERED TOMATOES
each March Madness matchup into a little party. It doesn’t have to be fancy; make fun snacks to eat while you watch or bet pieces of candy on who will have the most points to create great family bonding opportunities.
Brighten up after a cold, dark winter with this fresh and flavorful springtime dish.
2 1/2 tbsp olive oil, divided 4 boneless and skinless chicken breasts, pounded to a 1-inch thickness Salt and pepper to taste 1/4 cup whole-wheat panko
• • • • • •
2 tbsp Parmesan cheese
1 tbsp unsalted butter, melted 6 tbsp spinach pesto 2 cups cherry tomatoes 1 garlic clove, thinly sliced 1 tsp red wine vinegar
REWARD THE WINNERS WITH PRIZES. Offer prizes to each round winner as well as the overall bracket winner to get the whole family involved. Small prize ideas for each round can include a homemade dinner of the winner’s choice, a week’s supply of their favorite snack, or a coupon for getting out of a chore. Whoever wins the whole tournament (or makes it the furthest with their bracket) deserves a bigger reward. Offer them the chance to see a movie of their choice in theaters or to eat a meal at their favorite restaurant. CREATE A LEARNING OPPORTUNITY. Learning math or geography might not sound like your child’s idea of fun, but it can be when they learn it through the lens of March Madness. See if your kids would be interested in understanding the inner workings of the ranking system or studying where some of the qualifying colleges are located on a map of the United States. They may find it so interesting that they don’t even realize they’re learning valuable skills.
1. In a large ovenproof skillet over medium-high heat, add 1 tbsp olive oil. 2. Season chicken with salt and pepper, and add it to pan. Cook chicken for 5 minutes on each side, then remove pan from heat. 3. In a bowl, combine panko, Parmesan cheese, and butter. 4. Spread pesto over chicken and top with panko mixture. 5. Broil chicken for 2 minutes on high heat until browned. 6. In a skillet, heat remaining oil over medium-high heat. 7. Add tomatoes and cook for 6 minutes. 8. Add garlic and cook for 30 seconds, stirring constantly. 9. Season tomato mixture with salt and pepper, and add red wine vinegar. 10. Serve tomatoes with broiled chicken.
Inspired by CookingLight.com
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(770) 503-1022 www.KevinTharpe.com 405 Broad St. Gainesville, GA 30501 INSIDE THIS ISSUE
What Does the SECURE Act Mean for Your Retirement?
Retire in Style Boxing’s Greatest Battle
Pesto Chicken With Blistered Tomatoes March Madness Fun for the Whole Family
New York City’s Chaotic Annual Tradition
SMASHED MIRRORS, MAIMED SOFAS, AND MISSING BED-SCREWS THE DAY EVERYONE IN NEW YORK CITY MOVED
Moving is the worst. The costs of hiring a moving company and the sheer amount of time it takes to physically move everything make the whole affair an aggravating mess. And if you thought moving just one house on your street was terrible, imagine the chaos that would ensue if everyone in your whole city moved on the same day. That’s exactly what happened in New York City for nearly two centuries. FromColonial times until the end ofWorldWar II, May 1 was Moving Day in NewYork. On that day, every lease in the city ended, and pandemonium reigned in the streets as everyone scurried to their new homes. Eyewitness accounts of Moving Day describe the tradition as sheer mayhem. An English writer said Moving Day looked like“a population flying from the plague,”
and frontiersman Davy Crockett called it an “awful calamity”when he discovered the event in 1834. Still, some people loved Moving Day. Long Island farmers took their carts into the city on May 1 and charged as much as a week’s wages to move desperate tenants’ belongings to their new homes, which was a tidy sum in those days. Children were also fond of Moving Day because they got the day off school to help their families navigate the tumultuous time. A few prominent theories have emerged about the origins of this tradition. Some posit that May 1 coincided with the English celebration of May Day. Others say it morphed out of an event where servants would look for new employers. The most well-known
explanation, however, is the May 1 move commemorated the day Dutch colonizers “moved” to Manhattan in the first place. The Moving Day tradition began vanishing in the early 20th century because many cartmen and housing builders were drafted during WorldWar I, leaving fewer movers and less available housing. Additionally, the construction of the New York City subway gave other tenants rapid access to more housing options outside Manhattan. Finally, after many cartmen were again drafted in WWII, the tradition officially ended in 1945.
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