Category: News

Secure Act Bring Changes to Your Planning – Part 1

Over the summer of 2019, the House of Representatives passed the bipartisan Setting Every Community Up for Retirement Enhancement (SECURE) Act. On December 19, 2019, the Senate passed the bill, and it was signed into law by the President on December 20, 2019.

The bill affects many Americans and may potentially result in the update of many financial plans here at Longview. The bill is long and covers many areas including the following:

  • Required Minimum Distributions from qualified accounts
  • Contributions to Traditional IRAs past the age of 70.5
  • Changes to the stretch provision in Beneficiary IRA accounts
  • Updates to exceptions of penalties for early distributions from accounts
  • The use of 529 accounts to pay off qualified education loans.

There is a lot to cover! Over the next few weeks, I will be breaking down certain areas of the SECURE Act into a series of blog posts. In this post, we’ll start with the updates to Required Minimum Distributions (RMDs) from qualified accounts, which include vehicles like Traditional and Rollover IRA as well as 401(K) and 403(B) accounts that are in your name.

Required Minimum Distributions

As many of you are well aware, the magic age of 70 and a half (70.5) signifies the start of Required Minimum Distributions – a time in which you have to distribute a portion of certain types of accounts. The amount distributed is based on the balance of the account at the end of the previous year and a divisor based on your age at the current year. Let’s break that down a little more using Steve as an example:

Steve is 74 as of January 1, 2020, and his birthday is December 2. On December 31, 2019, Steve had an IRA that totaled $1,085,000. With his birthday in December, that means that Steve will be age 75 as of December 31, 2020, which will make his RMD divisor 22.9. So, knowing those two numbers, this is how we determine Steve’s RMD.

$1,085,000/22.9 = $47,379.91

As you can see, Steve must take $47,379.91 by December 31, 2020, and report that distribution as income on his 2020 tax return. Failure to take the distribution means he would face a 50% penalty on the amount in which he failed to distribute. To get a better understanding of what your RMD may look like, check out the IRA Required Minimum Distribution Worksheet from the IRS.

So, what does this have to do with the SECURE Act? RMDs are still the same in that a portion will need to be distributed based on your age in the current year; however, the age in which an individual has to start RMDs is now age 72 but only for those turning 70.5 after December 31, 2019. So, for those born before or on June 30, 1949, sorry, you still have to take Required Minimum Distributions starting at age 70.5.

As for those born on or after July 1, 1949, you will not have to start taking RMDs until you reach age 72. Let’s use Sue as an example as to how the change in the law will work now:

Sue’s birthday is July 11, 1949. In her annual meeting in 2019, Sue’s advisor told her of her upcoming RMDs starting 2020, given the fact that she would not turn age 70.5 until January 11, 2020. With the SECURE Act now in place, her RMD does not have to start until at least 2021, which in turn may present opportunities to consider and implement from both a financial and tax planning perspective.

One thing to note about her first RMD that is very similar to the former distribution rules is that she will not officially have to start taking her RMD until April 1 following the year that she reaches her RMD age. Under the old RMD rules, while she would have turned 70.5 in 2020, her first RMD would technically not have to be taken until April 1, 2021. The only caveat is that she would have to take her 2020 and 2021 distribution both in 2021, which would raise the amount of tax she would have to potentially pay on her 2021 tax return.

With the new RMD rules, Sue doesn’t have to take her first RMD until April 1 in the year following her 72nd birthday, which would be April 1, 2022. Again though, like before, if she did move forward with that, she would need to take both her 2021 and 2022 RMD in 2022 and report both of them on her tax return. Sometimes, this may make sense, but before implementing that, we strongly encourage you to speak with your financial planner before to see if it makes sense from a taxation standpoint, because it could affect not only the taxes paid but also your Medicare premium in future years. 

Qualified Charitable Distributions

For many of our charitably inclined clients, we may make a recommendation for them to complete a Qualified Charitable Distribution (QCD). For those who are unaware of what this is, when an individual reaches age 70.5, they can take their RMD or a portion of it (up to $100,000) and have that money sent directly to a charitable organization. The amount that is contributed by way of QCD is not counted towards any income on the income tax return. This has become even more important over the past couple years with the recent Tax Cut and Jobs Act of 2017, which increased the Standard Deduction, thus for many Americans there isn’t a tax benefit from an itemization standpoint of donating to a charitable organization.

The QCD has created a new way of making charitable donations a de-facto tax benefit. Here’s an example: 

Let’s say that Joe is 75 and has to take an RMD of $50,000. Joe is also charitably inclined and would like to give $10,000 to his favorite charity, but will still take the Standard Deduction on his tax return. With a QCD, Joe can take $10,000 from his RMD, give that directly to the Charitable Organization and then only have to report $40,000 towards his income on the tax return.

The QCD has always coincided with age 70.5 and the RMD age. Going forward, under the SECURE Act, while the beginning RMD age has changed for some, the QCD age will remain at age 70.5, meaning that an individual may have a couple of years to give from their qualified accounts before their RMD start age of 72. This, in turn, not only contributes to the goals for those who would like to give to charity but may also lower future RMDs, thus potentially lowering future tax liability too. As with any distribution strategy from your accounts, please consult with your financial planner to determine the most appropriate action to take that is in line with your goals, as well as provides benefits for you both now and in the future.

Happy New Year!

Happy New Year!

As we begin a new year, we would like to thank you. Thank you for sharing your lives and your stories with us over the last year. Some of you celebrated – adding to your family, retiring, or moving to a new home. Some of you have mourned – losing loved ones, going through a divorce, or struggling with health issues. Thank you for allowing us to be a part of your lives. We value the opportunity to share these moments with you and support you in your journey. It is with a grateful heart that we celebrate you as we enter a new year.

You’ve helped us celebrate a few of our own successes as well:

In the first quarter of the year, Longview launched a brand-new website.

New Website Launches

In May, Longview welcomed Chad Odell as the newest member of the Investment Management team. Andrew Gipner was named Leadership of Greater Huntsville’s Connect 22 Chair. Jeff, Jessica, and JJ attended the 2019 NAPFA Spring National Conference in Austin, TX.

Chad Odell Joins Longiew

In June, JJ was named to NAPFA’s National Board of Directors. Jeff, Jessica, and Andrew attended Man Up Gadsden’s annual Blue Ball in support of Prostate and Testicular Cancer awareness.

August was a busy month. Longview welcomed Jonathan Jones as the newest member of the Financial Planning team. We teamed up with Rocket City SGO to help host their Back to School Bash, a fun back to school party for their scholarship winners. Several team members and their spouses attended the American Cancer Society’s Belles & Beaus Ball.

Jonathan Jones Joins Longview

Jonathan, Jessica, JJ, and Andrew Attending Belles & Beaus

In September, several team members attended the ELM Foundation’s Little Miracles Luncheon and the Community Foundation of Greater Huntsville’s Summit on Philanthropy.

Lauren, Jonathan, Chad, Wes, Jessica and Andrew at Little Miracle

JJ, Jessica, and Andrew at the Summit on Philanthropy

October is always eventful. We hosted an open house at our Huntsville office. You helped us collect 357 pounds of food for the North Alabama Food Pantry! That’s more than double last year’s donations. JJ attended NAPFA’s Fall National Conference in Chicago. Longview, who served as the sole sponsor for the HudsonAlpha Alumni Association, attended the Associations’ Fall event.

In November, Jonathan and his wife participated in the Empty Stockings Gala. Team members also enjoyed attending and sponsoring the HudsonAlpha Tie the Ribbons event. Jessica Smith was honored with a Jack Davis Award from the University of Alabama.

Jonathan and Alex at the Empty Stockings Gala

In December, we celebrated together at our annual team holiday party. We also celebrated Andrew’s completion of the ACCREDITED ESTATE PLANNER® designation.

Thank you for the pleasure to call you our friends. We look forward to serving you in 2020! May it be your best year yet! 

Jessica Smith Honored with Jack Davis Award

The University of Alabama College of Human Environmental Sciences (CHES) presented the annual Jack Davis Professional Achievement Awards during homecoming activities on campus.

The Jack Davis awards are presented to outstanding CHES alumni for their professional accomplishments. The awards have been given out since 1986, and are named to honor the first man to graduate from the College, Dr. Lewis Clifton “Jack” Davis, Jr.

Longview’s Jessica Smith was selected as a 2019 award recipient.

Jessica Hovis Smith recently transitioned from the role of director of financial planning to the role of vice-president where she focuses on leadership, strategy, business planning and team development.

Smith holds Certified Financial Planner (CFP®), Chartered Advisor in Philanthropy (CAP®), Certified Private Wealth Advisor (CPWA®) and Chartered Life Underwriter (CLU®) designations. She was named to Investment News’ 40 under 40 list. Smith graduated in 2005 earning a B.S. in Human Environmental Sciences with an emphasis on family financial planning and counseling. She was honored for outstanding professional achievement in the area of consumer sciences.

2019 Jack Davis Award Recipients

Congratulations to Andrew Gipner for Completion of the ACCREDITED ESTATE PLANNER® Designation

Andrew Gipner has obtained the ACCREDITED ESTATE PLANNER ® designation. It is awarded by the National Association of Estate Planners & Councils (NAEPC) to recognize estate planning professionals who meet stringent requirements of experience, knowledge, education, professional reputation, and character. An AEP® designee must embrace the team concept of estate planning and adhere to the NAEPC Code of Ethics, as well as participate in an annual renewal and recertification process.

The Accredited Estate Planner® (AEP®) designation is a graduate-level, multi-disciplinary specialization in estate planning,obtained in addition to already recognized professional credentials within the various disciplines of estate planning. The AEP® designation is available to actively practicing attorneys (JD) and Certified Public Accountants (CPA); or those currently designated as a Chartered Life Underwriter® (CLU®); Chartered Financial Consultant® (ChFC®); Certified Financial Planner (CFP®); Chartered Financial Analyst (CFA); Certified Private Wealth Advisor® (CPWA®); Chartered Advisor in Philanthropy® (CAP®); Certified Specialist in Planned Giving (CSPG); or Certified Trust & Financial Advisor (CTFA).

The NAEPC is a national organization of professional estate planners and affiliated local estate planning councils (including the Financial & Estate Planning Council of Huntsville in which both Andrew Gipner and Jessica Smith are members) focused on establishing and monitoring the highest professional and educational standards. NAEPC fosters public awareness of the quality services rendered by professionals who meet these standards. NAEPC builds a team approach involving cross-professional disciplines to better serve the public’s need for estate planning.

Andrew’s completion of the designation also brings the advancement of knowledge to the rest of the team as a whole while contributing to one of Longview’s Core Values of teamwork and collaboration for the betterment of the firm and our clients.

2019 HudsonAlpha Tie the Ribbons Event

Jessica, Chad, Lauren, Jonathan, and Debbie attended the 2019 Tie the Ribbons event held at the VBC North Hall. The annual event was informational and moving, as always.

HudsonAlpha Institute for Biotechnology‘s breast and ovarian cancer research team of scientists are “committed to the goal of using genomic science and HudsonAlpha’s state-of-the-art technology to find new breakthroughs in breast and ovarian cancers.”

To learn more about the event, visit https://hudsonalpha.org/foundation/tie-the-ribbons-event/

2019 Empty Stocking Gala

Longview team member Jonathan Jones and his wife, Alex, had the privilege of attending this year’s Empty Stocking Gala. The Empty Stocking Gala is a Christmas charity event held at the Anniston Meeting Center in Anniston, AL each year. This year’s event marked the Gala’s 30th anniversary. Jonathan was a lifelong resident of the Anniston and Oxford area before relocating to Huntsville to join the Longview team in August 2019, and he knows firsthand the impact this event has on the community.

The Empty Stocking Gala began in 1989. Thirty years later, the event continues to be successful in making a difference in local communities during the holiday season. The event raises money to provide Christmas gifts to all children in DHR custody in the Calhoun and Cleburne County area. Additionally, it provides for gifts to indigent patients in local nursing homes. To learn more, visit the Gala’s website at https://www.emptystocking.net/.

HudsonAlpha Alumni Association Fall 2019 Event

For the 2019-2020 season, Longview has served as the sole sponsor for the HudsonAlpha Institute for Biotechnology Alumni Association. Alumni members were treated to another great presentation from the always fun and interesting Neil Lamb, PhD. The Fall event was held at the Paul Propst Center on campus, and it was the first presentation from the brand new 2019-2020 guidebook.

To learn more about the Alumni Association, visit https://hudsonalpha.org/foundation/alumni-association/.

You can also follow Dr. Lamb on his Shareable Science blog at https://hudsonalpha.org/shareable-science/.

Neil Lamb, PhD presenting.

Record Donations During Longview’s Huntsville Open House

We held our annual Open House event at our Huntsville office on Tuesday, October 22nd. Once again, we partnered with the Food Bank of North Alabama to collect non-perishable items.

Thank you, thank you, thank you to all of you who came out and donated! We collected 357 lbs., a record amount of goods. We truly appreciate your willingness to give. Thank you for spending some time with us!

Sweet Home Chicago

JJ is headed to the Windy City of Chicago, IL, for the 2019 NAPFA Fall National Conference.

With over 70 hours of continuing education from which to choose, the Chicago conference will host over 300 people during the course of the week. This year’s keynote speakers include:

  • Sebastian Terry, founder and author of 100 Things
  • Traci Brown, former member of the US Cycling Team and the author of How to Detect Lies, Fraud and Identity Theft
  • Ryan Jenkins, author and generational expert – “How to Attract, Lead and Engage Millennials and Generation Z”
  • Lloyd Shefsky, founder and co-director of the center for Family Enterprises – “Client and Self Gratification: Learn to Envision the Future”
  • Weston Wellington, vice president, Dimensional Find Advisors

“Members of the National Association of Personal Financial Advisors (NAPFA) who have met all necessary requirements of membership have earned the right to call themselves NAPFA-Registered Financial Advisors. This prestigious title is recognized by those in the field and in the media as identifying those who are professional, ethical financial advisors. It’s all about putting you, the consumer, first. NAPFA-Registered Financial Advisors are fiduciaries – at all times – for their clients.

NAPFA insists that every NAPFA-Registered Financial Advisor meet the highest competency standards. All NAPFA-Registered Financial Advisors must:

  • Meet stiff credentialing and educational requirements
  • Be primarily engaged as holistic financial advisors (rather than merely investment or tax advisors)
  • Meet the most rigorous continuing education requirements in the industry
  • Submit to outside professional review, to ensure that they do not have the conflicts of interest that commissions bring.”

NAPFA-Registered Financial Advisors are required to submit 60 hours of continuing education every two year. That’s twice the requirement of the 30 hours required by the CFP Board to serve as a CERTIFIED FINANCIA PLANNER™ Professional.

NAPFA’s two annual national conferences, along with their regional symposia, offer advisors opportunities to expand their knowledge, network with peers, and share stories and ideas about how to serve you better. Read more about what’s different about a NAPFA-Registered Financial Advisor at NAPFA.org.

Community Foundation of Greater Huntsville’s 2019 Summit on Philanthropy

Longview team members, JJ, Jessica, and Andrew recently attended the Community Foundation of Greater Huntsville’s Summit on Philanthropy. The Summit is “an annual celebration of our community’s generosity because we believe that together we can accomplish more than any one person, one company, or one organization can accomplish on their own.” The gala-style event, celebrating its 10th year, was held on Tuesday, September 10th at the Westin Huntsville in Bridge Street Town Centre.

Longview has long been a supporter of the Foundation’s work in our communities, and we are proud to continue our sponsorship of the Summit. Jessica Hovis Smith and Jeff Jones are both members of the Community Foundation’s Philanthropic Advisors Network. Please contact us if you are interested in learning more about The Community Foundation or would like to talk about your desires to become involved or create your own giving plan. You can also learn more by visiting the Community Foundation’s Web site at communityfoundationhsv.org.

Jeff Jones, Jessica Hovis Smith, & Andrew Gipner

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