Wait for it! Who knew that anticipating one person’s “Byeee!” could create such compelling podcast drama? We don’t want to undersell the exciting insights Host Josh Bretl is sharing about the Secure Act of 2019 on this episode of The Retirement Equals Freedom Podcast. But its special guest Erin Fogarty, an advisor at FSR Wealth, who generates the emotional high points! (You just have to listen really, really closely …)

In the meantime, if you’re stashing earned income in an IRA-type retirement account, you’ll want to know all about the implications of a new and evolving law whose reassuring acronym – SECURE – stands for “Setting Every Community Up for Retirement Enhancement Act.”

Without proactive financial planning, you may miss the boat on timing distributions and wind up paying taxes you want to avoid! You’ll learn about how The Secure Act of 2019 came to be (and why there’s already a 2.0 version under consideration) as well as some of specific changes that may impact how non-spouses who inherit retirement accounts will need to sequence distributions.

Co-host Dave Schmidt brings it all together with a vivid illustration of what could happen to retirees or soon-to-be-retirees who don’t get help decoding all the fine print! (Please note: No bunnies were harmed in the making of this podcast.)

You won’t want to miss this opportunity to jot down notes and questions for your retirement planner about this policy that’s still a work in progress!

This episode was fueled by Cometeer Coffee, both iced and hot!

Numbers are growing like crazy, so get onboard by signing up for the show’s new weekly email at this link and then come on over and join the conversation at our new private Facebook group, which you can find here (#MoreErin!).

Click here to learn more about or listen to previous episodes of The Retirement Equals Freedom Podcast. Don’t forget to sign up for the podcast email club while you're there!

Click here to explore the services that FSR Wealth Strategies offers and schedule a discovery call with one of the team’s CPAs. When it comes to living your best life, it’s never too early to get started!

But I always like to say, when the government

giveth, they always take it away somewhere else.

And the average person, the SECURE Act will actually

cause them more in taxes because they don't do

anything proactively about it.

Let's talk about the SECURE Act that was

passed by Congress in 2019.

In this episode, you'll learn why it came to be, the benefits

to retirees, and why a version 2.0 is already being discussed.

We'll also talk about how, without proactive

financial planning, you may miss the boat on timing

distributions, and wind up paying taxes you want to avoid!

And finally, how does the infamous Rabbit of

Caerbannog, from Monty Python, fit into all of this?

Well keep on listening friend.

This is the Retirement Equals Freedom Podcast.

Your host, Josh Bretl, is the owner of FSR Wealth Strategies.

And for the last few decades he's been helping

fine folks like you thrive in their retirement.

And me?

I'm Dave.

Josh's longtime friend, co-host, and fan of short

walks on a beach and long naps.

So now let me, let you, let me end this introduction so you can

learn all about the SECURE Act.

FSR Wealth Management is a registered investment advisor

located in Elmhurst, Illinois.

Information and opinions contained in this audio

have been arrived at by FSR Wealth advisors.

All information herein is for informational purposes

and should not be construed as investment advice.

It does not constitute an offer, a solicitation or recommendation

to purchase any security.

FSR is not providing legal, tax, accounting, or financial

planning advice in this audio.

These views are as of the date of this publication

and are subject to change.

Give me a chance, baby.

Did you hit record?

Did I hit record.

Yeah, I did.

Welcome everybody to the FSR Wealth Strategies Retirement

Equals Freedom podcast studio recording live.

You always say live.

Yeah.

Well, we are live.

We aren't recording live.

No.

But we're recording live in person, we're just

not broadcasting live.

You had a really good idea.

One I've proposed before, and Missy even confirmed my idea.

We should do a live podcast for your favorite clients.

You think we've built this up to such a

listening audience already that we're ready for a live podcast?

Yeah.

Call me crazy, but 250,000 downloads per episode

justifies a live podcast.

Well, I look forward to it.

Tell you what?

Yeah.

When we cross a threshold, when

we hit 500 downloads-

500 downloads-

... per episode-

... in any episode.

Okay.

... we will do a live podcast.

Okay, deal.

Listeners, we're going to hold Josh to that.

500.

I don't know why 500, but 500.

And we'll have reserved limited seating.

And anybody there in the audience gets all the snacks

we talk about on the show.

We were talking about a fun client event

for the fall coming up here, and we were brainstorming

some ideas this morning.

And, one of Missy's ideas was that they get

a chance to meet Dave.

That's right.

I don't know if that's a draw or not, but-

The reason I hesitate is because the

line to meet me for my autograph will just...

I mean, come on, it's going to be out the door.

Again-

Yeah.

... I said it on a prior episode, it's surprising

to know you like I do and how introverted you are.

Yeah.

And you would actually, I think,

hate that whole process.

See, I can do small talk up to about

15, 20 seconds, then I'm like, "Okay, I feel awkward.

Move on.

Move along to the next autograph.

Thank you."

So Dave-

Yeah.

... we have someone sitting at the table with us-

Yeah.

We do.

... who hates sitting at the table with us.

Aw.

Yeah.

I'm okay with that.

Sure.

I'm going to introduce Erin, and if

she says two words during this whole podcast I will

consider this to be a success.

But, Erin started work with us five years ago.

We hired Erin as, she was a teacher and stayed at home to

raise her two sons for a few years and decided she wanted

to get back in the workforce.

And over the last five years, she has become an amazing

advisor, and is integral in every part of our practice.

Like you, where you touch all different parts of our

office, she does so as well.

But, hers are actually highly valued by the

clients, unlike yours.

Yours are just great moments of brevity.

I'm highly valued by very few in this office.

if any of our clients are listening, they

definitely know who Erin is.

And we asked her to join us because one of the things

that we were talking about was being more prepared for

these podcasts to have some better notes and being able to

record and give more content.

And, I spent a lot of time with Erin, and she is great

at coming up with all these wonderful notes for us.

And we said, "We should have her join us for the podcast."

Now, Erin's an amazing advisor.

She is great working with clients one-on-one.

We just put that microphone in front of

her and she's not happy.

I also think the podcast could use

another voice because you and I sound a lot alike.

You and I talk about the same things, food

and taxes, and blah.

I think Erin will just bring a fresh perspective, and she

sounds a lot nicer than we do.

Did that sound nice?

It did.

Oh my gosh.

So Erin, say hi.

Hello everyone.

Dave Schmidt:

That's so well done.

Dave Schmidt:

That's so good.

Dave Schmidt:

I see something on here about a Zach car story.

Dave Schmidt:

I love a good Zach story.

We brought our kids up a fair amount, and

Erin actually has two boys similar in age to our kids.

And, Zach is one of my twins.

And Missy was telling this story this morning and I

kind of forgot about it.

And we were driving...

Zach's eight.

We were driving through town.

Actually, I'm reiterating Missy's story here,

so if I screw this up she can yell at me.

But, she's driving through town with the kids in the car and we

drove past Elmhurst University.

Zach, I think, asked Missy, "When we get older, will we

go to Elmhurst University?"

And, we explained what a college was.

And she said, "Well, you might or you might go find a school

that suits your interest."

And Alex likes to write, and he said, "Well, if I want to be

an author, where would I go?"

And she said, "Well, you might go to a school that

specializes in writing," or something along those lines.

And Zach asked very quietly in his cute little voice, " I

want to go somewhere where they teach you to be a good driver."

And Missy asked him, " What do you mean?"

He goes, "Well, I just want to be a dad."

And he thinks all he needs to do is drive his kids around.

In our house, get carsick a lot unless I'm driving,

I'm also a control freak.

So if we're all in the car, I'm usually the one

driving 99% of the time.

So I think in their mind, they think dads drive the car.

Zachy.

We laugh when they talk about what they're going

to be, where they're going to live when they grow up.

And I don't know how they come up with things, but Zach

just always says, "Well, I'm living with you, mom and dad."

Oh man.

So, we can't get him out.

Nor do you want him out.

No.

No.

Yeah.

Okay.

Okay.

Hey Mr.

Josh, let's take a break.

You've been talking for so long and my ears are sore.

Let's not make them snore, listening shouldn't be a chore.

So let's get to know Josh and Dave and watch our ratings soar.

Oh yeah.

See I can do it a little live too.

Josh, today it's your turn to pull a car from the deck

and let everyone get to know Josh, and Dave, and Erin.

I promised her she would not have

to answer a question.

But, if she wants to, she can.

And it's not a bad question.

It's a relatively easy one.

And, you come into my answer.

So, I got to think about this.

I mean, I saw the card.

And you just said, "Dave."

No.

But there's a part of this.

You'll get it here.

And my absurdly long explanation to everything.

Oh God, here we go.

Was there something that you asked

for repeatedly as a child, but you were always told no?

Yes, multiple things.

I have to pick one though?

Pick one.

Water balloon slingshot.

You always wanted one?

Always wanted a water balloon slingshot.

Who was more adamantly against it, your

mother or your father?

Oh, 100% Becks.

Oh, I could see that.

Oh, my dad would get me anything I asked for, but

Becks was always like, "Uh-uh."

It was between a Swiss Army knife and a water

balloon slingshot.

Whenever we would go to Dora County, again, probably land

that your ancestors gave up in a poker match, I would

want something totally random.

Well, I ended up getting that pocket knife, and within 10

minutes I had cut both fingers.

And I was wiping the blood on a bush so nobody would see.

And of course, Julie busted me.

I don't hear the end of that story to this day.

But, the water balloon slingshot is something I never got.

It was like your Red Ryder BB gun?

"You'll shoot your eye out, kid."

Dave Schmidt:

Essentially it was, yeah.

Dave Schmidt:

Essentially, yeah.

Dave Schmidt:

So maybe I Landon one just to spite my mom.

So, when she comes into town, " Grandma, help me

with the three-man slingshot."

Yeah, exactly.

Like, "Landon, we're going to peg Nana."

Mom, I love you.

I would never do that.

Yes I would.

So where mine comes in, something I was repeatedly

asking for, and you realize that your parents actually were

intelligent as you get older and have your own children.

I was always told no whenever offered a sleepover.

Oh.

And your house, you had sleepovers all the time.

Our friends were always on your floor.

I mean, I don't even think you have to ask.

Joey, and I don't know, they lived on your living room floor.

Oh yeah.

A hundred percent, yeah.

And, I was never allowed.

And, my father always said he hated sleepovers.

And I might get to go to one to two a year at most, at max.

Oh, can I interrupt?

So, not just sleepovers at your house, but you

attending sleepovers?

Yes.

Doesn't matter.

Oh man.

Doesn't matter.

And, he always says because we were such jerks the next day

that he just hated sleepovers.

And now, as my kids get older, I'm like, "God,

man, he was so smart."

I never want my kids to go to a sleepover.

I do think this needs clarification

because in junior high and elementary school, we would

try to stay up 24 hours a day for the sleepover.

And, we were complete jerks.

But high school, that was different.

We respected our sleep patterns a little bit more.

A little bit more.

Yeah.

Maybe, we wanted sleep.

Yeah.

We wanted sleep.

So Joshua, today we've been talking a lot about bonds

and things of the nature.

Now, what do you think-

Bonds and things of the nature?

Yeah.

Is that really what you went with on that?

Yeah, only just because I'm trying

to multitask and my little brain can't see that.

I see you flipping pages.

You looked like you were...

I mean, that was some hard concentration there.

And, I failed too.

So, I see something here about the SECURE Act of 2019 that

became law in yeah, 2019.

What you got for us today, buddy?

So, what is the SECURE Act?

The SECURE Act was passed by Congress in 2019, and

went into law pretty much in effect for early of 2020.

And like any good government law that has a name to it,

there's an acronym to it.

So-

Of course.

... the acronym is great.

This one is Setting Every Community Up for Retirement

Enhancement Act of 2019.

Could it be any more ridiculous?

I mean, I want to barf just looking at it.

It's like my pneumonoultramicroscopicsilicovolcanoconiosis

word.

That you can actually spell.

Thank you.

That's ridiculous.

But, the SECURE Act was Congress's "way" they

thought of making some of the retirement rules better.

And, I have a line in my workshop that I give that I talk

about the fact that the tax code now is about 83,000 pages long.

This is just part of those 83,000 pages.

And people think that those extra pages that they have

there are to make people pay more in taxes, and I'll

argue it's actually designed to make people pay less-

Yeah, it's the opposite.

... you just have to know about it.

And the average person, the SECURE Act will actually

cause them more in taxes because they don't do

anything proactively about it.

So, what did it do?

Now, there was a lot of things for people who were still

working that were involved in the SECURE Act, but there

were some key attributes that impact retirees.

So, I want to talk about those since most of our clients are

in the retiree phase of life.

The biggest most notable thing that we saw was that the

SECURE Act changed the RMD age.

The required minimum distribution age.

It used to be at 70 and a half.

Dave, you were looking me in the

eyes when you said that.

You weren't even looking it up.

I'm so impressed.

I remember we talked about this a few times.

RMD, Required Minimum Distribution.

This is the age at which people are required to

start taking some money out of their 401[k]s and IRAs.

And the reason they're required to do it is

because the IRS wants to collect taxes on that money.

That age used to be 70 and a half, and they pushed

that age back to 72.

So, for the first few years there was an overlap.

Some were at 70 and a half, some were at 72.

But now that we've had it for a couple years, the new

RMD age is 72 years old.

And so, that gave people an extra one, actually, two to

three years, depending upon their birth date, when it

fell, of years to delay taking money out of their IRAs.

For people who didn't need that money, or trying to let it grow

without paying taxes on it, they thought that was a great thing.

" It's two more years we don't have to do anything with

it," or whatever it might be.

But I always like to say, when the government

giveth, they always take it away somewhere else.

And what they did is, they changed on the back end

the stretch IRA rules.

So what is, what was I should say, a stretch IRA, because

they're now dead, but a stretch IRA was a way to leave

money after you were gone.

And, people will hoard money.

They'll hoard things, but you can't take it with you.

It's got to go somewhere after you die.

And to your heirs, to your kids, or really anyone other

than your spouse, the stretch IRA rules took effect.

So what that said was, you could leave that money in

the IRA and take it out over your life expectancy.

So, if you inherited an IRA at 50 years old and they thought

you were going to live till 90, you could slowly take it

out over that time period.

And so what that did is, it allowed for

smaller distributions.

So, if there's a million dollars in the IRA, it

might be $20,000 a year, $40,000 a year, whatever-

For your life.

... for your life.

Yeah.

That doesn't have a major tax impact.

It's extra money, but you're not going to have a major

tax hit when that occurs.

Now, they've gotten rid of that.

And so now, under the SECURE Act, you only have 10 years

to take the money out.

So anyone who died in 2020 or later, they fall

under the new rules.

So we have dead people's IRAs who fall under the old rules

that are still being stretched.

And then, we have people under the new rules, depending upon

the day of their passing.

And now, that 10-year rule may seem like a long time, but

for a lot of people who wanted that tax protection of taking

it out slowly, now let's say, that same million dollars,

now we have to take it out over a 10-year time period.

That's a hundred thousand dollars a year-plus that

they're required to take out.

Yeah.

So, that will probably put people in a

different tax bracket.

You start adding that level to your income, if

you're in a high income bracket right now, that could be a

substantial difference here.

I feel like we haven't touched the surface on

the SECURE act, but in episode 18, that was the one, Where

Does Your Money Go When You Die?

you said, "If you have not talked to a lawyer since

the SECURE Act went into place, you need to do so

because of major changes."

I feel like this is probably the biggest change.

This is where the change came into play.

And this has to do with, we get really dorky here, but

this has to do, if you were utilizing a trust as your

beneficiary, there were some very specific what they called

conduit rules, and the conduit rules change in the SECURE Act.

So if you are using a trust, and you have not had an attorney

look at it since the SECURE Act went into effect, which was

January 1st, 2020, make sure you have an attorney review it.

And I am not an attorney, but there's some goofy

nuances as it comes into play there, so we have to

make sure that gets done.

And the way that the rule setting in our country works

is, Congress passes a law and the law is general.

And then, the different government agencies get

to create the rules.

So in this case, the IRS creates the rules.

And originally, what the 10-year rule said was, you

just had to have it empty at the end of 10 years.

So you can, in essence, let it grow over 10 years.

Oh, and then do one lump-

And then, one big lump sum in the 10th year.

And, people were doing that to try and figure it out.

They were just waiting.

There was a lot of people that did that.

Well, they just came out two years later and said, "No, the

way our rule is going to be written is you have to take

out equal amounts every year."

Wow.

And, it's a giant disaster.

It has not been finalized yet, but make sure that whatever rule

gets finalized, you guys, you pay attention to that because

the penalties for not following that rule is substantial.

Are the tax implications on this money,

is it taxed the same way as normal income for an individual?

Yes.

Whenever money comes out of an IRA, it just gets added to

whoever's income took it out.

Got it.

So, if you took it out while you were alive, it

gets added to your tax return.

If you leave it to someone, it gets added to their tax return.

Hashtag tax nerd.

And that plan, I mean, that leads to some very

real planning opportunities.

We did a couple episodes on Roth IRAs, and we did a whole

episode on Roth conversions which, if you haven't listened

to, go back and listen to it.

It gives a lot of people an extra one to three years

to plan for those Roth conversions, because you

cannot convert RMD money.

You cannot convert money that you have to take out for

required minimum distribution.

But, that gives you two more years to plan, so

that's a great thing.

So, where the government did a nice thing, not collecting taxes

a year and a half early, they're going to collect a lot more

taxes on the back end for people that haven't planned for it.

So, that's a big thing that occurred in the

SECURE Act there.

There's a few other things that people need to be aware of.

A percentage of our clients are still working.

And even if they have part-time jobs, there used to be a

limit that once you turned 70 years old, you couldn't put

money into an IRA anymore.

A Roth you could, but an IRA, you couldn't,

they got rid of that.

Oh, so there's no age limit?

There's no age limit anymore.

Okay.

So, you can be 90 years old and as long as you

have some sort of earned income, you can put money into an IRA if

it is the right thing for you.

I have a question though.

So, it could be two things happening at once.

You could be putting money in, but also required

to take money out?

Yep.

Now, the SECURE Act actually got a lot of positive press.

The government marketed it really well because no one

really cares what happens to your money after you die, so

the fact that they gave that extra time was very positive.

And because of that, they're already looking

at SECURE Act 2.0.

Oh, geez.

So, it passed the House in the late March of this

year of 2022, and the Senate's been doing what the Senate

does to it for since then.

If you go on vacation and then you come back

and go on another vacation.

But, look for something like

that to come out too.

So, this is one of those rules that's going to impact

how much you can spend.

And just like the SECURE Act was, there's certain things that

are going to impact how much you can spend in retirement.

And for those people that have the majority of your assets

inside of IRAs and 401[k]s, which is most of America,

you need to know these rules and how they impact you.

Are you aware of any other major changes to 2.0?

Right now it's all talk.

All speculative.

It's all speculative.

I mean, SECURE Act 1.0 looked totally different going

through Congress than the final bill that came out.

They're looking at increasing the age from 72, up to 75.

They're talking about shortening the stretch from 10 to 5 years.

So, there's all sorts of things that are out there.

I'm not going to crystal ball-

Not speculate.

... that until it actually comes out.

Right.

Unless you actually run for Congress.

And then, we can ask you directly what's in the bill.

Oh yeah, ask me.

And, that will never happen.

No, it will not.

Dave Relates to Retirees.

Yeah.

It's the yeah that gets me every time.

You love the yeah.

Erin, you don't have headphones on, but I just played the Dave

Relates to Retirees segment.

Are you excited to hear what it is today?

I sure am.

All right, a little background on that.

The first few times Erin spoke, she was too far from

the microphone, so I'm not sure I'll be able to pick it up.

This time she deliberately brought her voice close

and said, "I sure am."

What would this podcast be without Erin today?

This episode would be terrible.

It would be a little...

All right.

Anyways, Erin, Dave Relates to Retirees.

All right.

So, I'm looking at this-

it requires a throat clear.

Yeah, absolutely.

I'm looking at the SECURE Act.

And to me, I love the idea that you can just continue

to contribute money to an IRA and let that money grow.

Similar, now, a lot of people on this show that listen to the

show, don't know that you and I have many contracts in life.

One of them is, at age 70, by law, you do not have to

pay for my meals anymore.

But now with the SECURE Act, I talked to a few Congressmen,

and they changed it.

They said, "Josh can now buy Dave meals until Dave dies."

So for me, this is a wonderful change in my life.

It's going to change my life dramatically.

And, I'm just happy about it.

Dave Relates to Retirees.

Yeah, what have you got Josh?

So, a lot of times on these podcasts I think

about what I'm going to say.

And when you do the Dave Relates to Retirees, I have to

really listen, and think, and process the comments so that

I can come up with something that the Full House music that

is going on in the background right now sounds good against.

You say that Josh, but really, Dave

Relates to Retirees comes down to one of two things.

It's either you buying me something or a story from our

childhood, so it shouldn't be that hard for you.

It's not that hard.

I just want to make sure that I can spin

this the right way here.

And kind of like the SECURE Act, you just saw the

good parts of that bill.

I'm an optimist.

You did.

You just saw the RMD age being pushed out.

You just saw me buying you things for longer.

I'm a Cometeer half full.

You are.

But what you didn't see was that you have to start smoking.

Oh.

Yeah.

I mean, the reason I'm going to try and kill you off earlier-

What?

... so you actually don't live long enough.

You just didn't read that part of the law.

Oh my gosh.

That's really morbid, Josh.

I'm sorry about that-

Yeah.

... but that's the way it was written.

I got that passed through.

Wow.

Okay.

Yeah.

And, that's not really the case, and obviously people.

In fact, so we were at my sister's, little girl's birthday

party's this weekend, and her father-in-law was there and

he's a regular podcast listener.

And on the way out the door, he tells me, "I love your podcast.

Dave is nuts."

Those were verbatim, word for word what he said.

What.

I'm nuts.

And so, I think this is another great example, but-

Why must you needlessly complicate everything?

You got to tell a story about a story always josh.

I do.

But no, the SECURE Act is one of those.

There's some good things if it's taken advantage of, and if

it's planned for appropriately.

Like your new law that you somehow snuck in-

Want, yeah.

Yeah.

... snuck in there.

But, there's also things that if you're not

aware of could harm you.

You want to make sure that you are taking the whole

picture into consideration as you're doing your planning.

Your planning is where you're going to get fed from.

Everyone else's planning is how are they going to take money

out of their IRAs in the most tax efficient possible manner.

Are you a Monty Python fan?

I grew up with a dad who loved Monty Python.

I think I've seen a few of the movies.

Erin, Monty Python, Holy Grail?

Have you seen it?

Not at all.

Not at all.

"Bring out your dead."

"Bring out your dead."

Okay, but this SECURE Act reminds me, I should

have done this for my Dave Relates to Retirees.

It's the scene where they're worried because they're

about to meet the epic battle master and they're all scared.

And they get to this big pit and it's just this cute fuzzy bunny.

And they're all like, "Oh, that's the killer?

He's so nice."

They're like, "Oh the SECURE Act.

That's so nice."

The bunny's the SECURE Act because before you know it, the

bunny's attacking them, eating their faces and their necks.

It's like that.

The SECURE Act is the rabid bunny from Monty

Python and the Holy Grail.

Dave Milburn, he is nuts.

He's nuts.

Trust me.

But no, I mean, the difference is, the SECURE

Act is not designed-

There's no difference.

It's the exact same thing.

It's not designed to attack you and kill you.

It's more just, you have to know how to work with it.

Okay.

Oh fine.

But, it's really there.

SECURE Act, man.

SECURE Act, man.

It's important.

And, I hope we conveyed some ways that you should be

thinking about it for retirees.

But, it was a fun episode.

It was a great idea.

Good, yeah.

So Josh, I don't know about you, but I would

love to see more people go to fsrwealth.com/podcast.

Join the free email club.

Numbers are growing like crazy.

And, if you're listening to this and you got one good

laugh out of it, please go to fsrwealth.com/podcast,

pop in your name and email address, and you'll be the

first to know of new episodes.

That would be fantastic.

And if you are on the Retirement Equals Freedom Facebook group,

you should just write #moreerin-

Yes.

... and I think that we could get that one to grow.

Oh my gosh.

We're going to have millions and millions and millions of them.

Cool.

All right.

Well, on the count of three Josh.

1, 2, 3.

Bye.

Erin, I'm waiting for you.

Bye.

Come on.

Bye.

Yes.

Yes, we got it.

That was worth all of it right there.

Erin.

Erin.

Well, it's no ordinary rabbit.

That's the most foul, cruel and bad tempered rodent that