Ways your finances could be impacted this year

Ways your finances could be impacted this year
Generic money photo (Source: Pixabay)

LOUISVILLE, Ky. (WAVE) - The new year brings some new financial rules.

We’re going to see big changes to our money in 2020. Tim Riney from the Family Wealth Group was a guest on WAVE 3 News Weekend Sunrise with details on how your finances could be impacted. The Secure Act recently passed and went into law on the first of the year. This will impact anyone with an IRA or 401-K.

Riney said it’s the most significant piece of legislation that has been passed in over a decade that’s geared toward retirement savings.

“You can contribute to an IRA at any age now as long as you are working,” Riney said. “That is different than it used to be. They have moved the required minimum distribution age to 70.5 to 72. That is when you are forced to take money out of that bucket. That is a big deal. Gives us more time to do planning. But, don’t think for a second the government is not getting something out of this deal. The con is if you are inheriting an IRA and you are a non-spouse, a child, you inherit that IRA. Used to be you could stretch that IRA over your life. Now, they’ve shrunk that down and you have to take that money in ten years. that is a big deal.”

Riney added if you don’t use it in the 10 year window, you will pay a penalty.

The standard deduction for the 2020 tax year is also changing.

"In 2020, it's going to $12,400 for individuals who are under the age of 65. For married couples going up to $24,800. We still have the child tax credit that are higher."

Riney said if you have any changes happening in 2020, like getting married, starting a business or having a baby, you will want to use these updated numbers to estimate your tax liability. If one of your New Year’s Resolutions is saving more for retirement - you’re in luck!

“You can throw more money, $19,500 if you are under the age of 50 towards your employer plan, $26,500 if you are over the age of 50,” Riney said.

Riney said social security benefits also increased by 1.6% on January 1, which averages out to $24 a month.

Remember, you can claim social security benefits at the age of 62, but you will not receive 100 percent of your benefit until you hit your full retirement age.

For more information on the Family Wealth Group click here.

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