Two things in life are certain: death and taxes, but have you ever considered the impact your death has on the taxability of your things? Depending on how you are saving, you could potentially be passing a tax obligation onto your heirs.
The SECURE ACT was enacted on January 1, 2020. While it has been a few years since the act was passed, the effect of the largest retirement reform since 2006 is still being felt today. One of the major changes was the implementation of new required minimum distribution (commonly known as RMD) rules for Inherited IRAs. I like to call this the death of the Stretch IRA. First, let’s establish that an inherited IRA is when a loved one or family member dies with money left in their IRA, 401K, or even 403B, and you are named as a beneficiary. The funds are passed on to you through a vehicle called an Inherited IRA.
In 2012, McLaren Health Care froze its pension plan. Since then all employees had access to a 403(b) retirement savings plan but the pension plan remained frozen. Last year, McLaren made the decision to terminate the pension plan. The termination of the pension plan is unfolding now.
General Motors has announced they will be offering voluntary buyouts to a “majority” of its U.S. salaried employees. The buyout offer is part of GM’s effort to reach a total of $2 billion in structural cost savings over the next two years. Of which, they expect 30%-50% of that cost savings to occur in 2023
Ford and General Motors are among some of the largest employers here in Michigan. They also happen to be two of just a handful of employers that offer a pension. However, many employees may not understand that the interest rate hikes by the central bank are having a profound effect on how your pension fits into your retirement plan.
Business owners have a great deal of responsibilities to contend with on a day-to-day basis. As a business owner myself, I can understand and appreciate the sometimes overwhelming list of tasks that need to be done. Among that list, usually somewhere near the bottom, is the process of setting up a retirement plan for yourself and your employees. Although setting up a plan does involve some work on the part of business owners, it does not necessarily need to be a time-consuming or expensive proposition.
I grew up in a small town outside of Flint, Michigan called Swartz Creek. Many of the people in our community worked for one of the “Big Three” automakers, including my uncle, all three of my best friends’ dads, and many of my extended family. These companies were a classic example of a typical 20th-century employer. Right out of high school you could get a good job and make a very good living. It was certainly not easy work, but if you stuck with it for 30 years you would be well taken care of with an opportunity for early retirement, a good pension, and excellent health care benefits. Today, things are very different.
It is no secret that women traditionally had little to do with family finances or retirement planning. Over time, women have come a long way, especially as their presence in the workforce expanded and income increased.