IN THIS ISSUE:

1. Proposed Retirement Bill Is Great News For Seniors

2. High Points of New Bipartisan Retirement Legislation

3. New Higher Age For Required Minimum Distributions

4. New Account Balance Limits & Exemptions For RMDs

5. Higher “Catch-Up” Contribution Limits For IRAs & 401(k)s

6. ALPHA ADVANTAGE STRATEGY Webinar – Tomorrow 11:00am CST

Overview

There is new reform legislation making its way through Congress which will significantly affect how many of us save for retirement and specifically how, and how much, we can contribute to our retirement accounts and at what ages. This is the most significant retirement saving reform legislation in years. I’ll break it all down for you below.

It is not certain if the bipartisan reforms will be passed this year or will be pushed into early next year after, presumably, President-elect Biden is sworn into office. Either way, I expect this new legislation, in some form, to make it into law.

Proposed Retirement Bill Is Great News For Seniors

Lawmakers on both sides of the aisle in Washington recently introduced a new piece of legislation which includes several perks for seniors. The Securing a Strong Retirement Act of 2020, proposed in the House of Representatives by Rep. Richard Neal (D-Mass.) and Rep. Kevin Brady (R-Tex.), could help retirees and workers keep more of their hard-earned savings.

Logo of the House Committee on Ways and MeansThe new bill out of the House Ways & Means Committee, assuming it passes (which looks likely), builds on the Setting Every Community Up for Retirement Enhancement Act – the so-called “SECURE Act” of 2019 – to further improve workers’ long-term financial well-being. The new bill will enable more workers to begin saving earlier – and saving more – for their futures.

This bill will help Americans approach old age with the confidence and dignity they deserve after decades of hard work and sacrifice. “Our legislation will make it easier for folks to save, protect Americans’ retirement accounts, and give workers more peace of mind as they plan for the future,” said co-sponsor Rep. Kevin Brady of Texas.

The new bill offers some substantive incentives to get workers saving for their retirement earlier by automatically enrolling employees in their company’s 401(k) plan, whenever a new plan is created. The bill also creates new financial incentives for small businesses to offer retirement plans for their employees.

High Points of the New Bipartisan Retirement Legislation

Here are the main provisions of the Securing a Strong Retirement Act of 2020:

  • Promote savings earlier for retirement by enrolling employees automatically in their company’s 401(k) plan, when a new plan is created;
  • Create new financial incentives for small businesses to offer retirement plans;
  • Increase and modernize the existing federal tax credit for contributions to a retirement plan or IRA (the “Saver’s Credit”);
  • Expand retirement savings options for non-profit employees by allowing groups of non-profits to join together to offer retirement plans to their employees;
  • Offer individuals 60 and older more flexibility to set aside savings as they approach retirement; and
  • Allow individuals to save for retirement longer by increasing the required minimum distribution age from 72 to 75.

These are the high points of the proposed new retirement legislation, but there are a number of additional benefits which are also included in the new bill:

  • Allow individuals to pay down a student loan instead of contributing to a 401(k) plan and still receive an employer match in their retirement plan;
  • Make it easier for military spouses who change jobs frequently to save for retirement;
  • Allow individuals more flexibility to make gifts to charity through their IRAs;
  • Allow taxpayers to avoid harsh penalties for inadvertent errors managing an IRA that can lead to a loss of retirement savings;
  • Protect retirees who unknowingly receive retirement plan overpayments; and
  • Make it easier for employees to find lost retirement accounts by creating a national, online, database of lost accounts.

A section-by-section summary of the bill can be found HERE.

As you can see, there’s a lot to like in this bill; it’s not perfect, of course, but it may go a long way toward addressing the savings crisis we face in this country. Let’s look more closely at some of the provisions highlighted above.

1. New Higher Age Requirement for RMDs

Required Minimum Distributions (RMDs) are mandatory withdrawals from your 401(k) or traditional IRA once you reach a certain age. The age at which seniors were required to take RMDs was previously 70 1/2, until the SECURE Act changed it to age 72 in 2019. Under the new legislation, lawmakers are proposing increasing the age requirement again, this time to age 75.

This would be good news for seniors who plan to continue working until their mid-70s or beyond, because it means you can keep your money in your retirement account longer without being forced to take distributions.

Currently, you're generally required to start taking RMDs once you turn 72 years old even if you're still working. Between your wages and RMDs, a larger income could potentially push you into a higher tax bracket. But if the age requirement changes to 75 years old, you may be able to avoid RMDs for a few more years.

2. New Account Balance Limits & Exemptions For RMDs

Another proposal under the new legislation is allowing those with retirement account balances of less than $100,000 to be exempt from RMDs altogether. This change could be beneficial for retirees who are aiming to minimize retirement account withdrawals to help their money last longer.

If you have less than $100,000 in your 401(k) or traditional IRA and you're trying to stretch every dollar, you may opt to rely more heavily on Social Security benefits or other sources of income to give your investments more time to grow. And when you don't have to take RMDs, you can avoid draining your retirement fund too quickly.

3. Higher “Catch-Up” Contribution Limits

If you're contributing to a 401(k) or IRA, you're eligible to start making “catch-up” contributions when you get closer to retirement. The contribution limits for 401(k)s and IRAs are $19,500 per year and $6,000 per year, respectively. Under the current law, once you turn 50 years old, you can contribute an additional $6,500 per year to your 401(k) and an extra $1,000 per year to your IRA.

The new legislation proposes creating an additional catch-up contribution limit, which would allow workers age 60 and older to add an extra $10,000 per year to their 401(k) or IRA. For super savers, this higher limit could help you head into retirement with a much more robust nest egg.

While it's too soon to say whether this new bipartisan legislation will pass (although I predict some form of it will), it never hurts to start thinking about how these changes could affect your retirement.

My other prediction is, if this bill passes, it will receive a LOT of fanfare in the media, as it should. My hope is all this media coverage will grab the attention of younger Americans and cause them to think more about starting to save for retirement even sooner. Let’s hope so!

ALPHA ADVANTAGE STRATEGY Webinar – Tomorrow at 11:00am CST

In the last few months of 2019, I aggressively promoted our Alpha Advantage Strategy in these pages week after week in an effort to get more readers to add it to their portfolios. The main reason I wanted more investors to diversify with Alpha Advantage was its ability to go short in major market corrections and bear markets.

I sincerely wish more of my readers had invested at the time because the strategy is having its most profitable year ever in 2020. By a long shot!

Our HWM Alpha Advantage Strategy, with its ability to go long or short, has managed to gain 62.6% for the year as of October 31 (net of all fees and expenses) – its largest gain ever – and the year is not over yet. As always, past performance is no guarantee of future results. Be sure to read the Important Notes at the end of this email.

The huge run-up this year follows its gain of 21.9% in 2019, 10.7% in 2018, 18.5% in 2017 and 17.7% in 2016. The 5-year average return is 26.3%. This is real performance net of all fees and expenses. Take a look at the FACT SHEET to see for yourself.

The Alpha Advantage Strategy has been so successful because it has multiple professional money managers in a single account. Each of these successful managers has the ability to trade long or short, meaning they have the potential to make (or lose) money in up or down markets.

Join us tomorrow for a webinar with Paul Montgomery, Alpha Advantage's Trading Manager, on Wednesday, November 18 at 11am Central Time. Paul will explain how the multi-manager strategy works and give you an opportunity to ask any questions you may have.

If you haven’t taken a serious look at Alpha Advantage, I strongly suggest you do it now, especially in light of its excellent performance – despite the stock market meltdown early this year, which Alpha took advantage of. The minimum investment is only $50,000.

Even if you can't make the live webinar, be sure to sign up. We'll send you a recorded version of the webinar you can watch at your convenience. You can also call us at 800-348-3601 if you want to learn more.

Wishing you profits,

Gary D. Halbert

IMPORTANT NOTES: Halbert Wealth Management, Inc. (HWM) and Scotia Partners, Ltd. (SPL) are Investment Advisors registered with the SEC and/ or their respective states. Information in this report is taken from sources believed reliable but its accuracy cannot be guaranteed. Any opinions stated are intended as general observations, not specific or personal investment advice. Investments mentioned involve risk, and not all investments mentioned herein are appropriate for all investors. In some cases, HWM receives compensation from SPL in exchange for introducing client accounts. For more information on HWM or SPL, please consult Form ADV Part 2, available at no charge upon request. Officers, employees, and affiliates of HWM may have investments managed by the Advisors discussed herein or others.

As a benchmark for comparison, The S&P 500 Total Return Index, a registered trademark of McGraw-Hill Co., Inc., was used to represent an unmanaged, passive buy-and-hold approach. The S&P 500 Total Return Index is a market capitalization-weighted index of 500 widely held common stocks and its performance assumes that all dividends and distributions are reinvested. The volatility and investment characteristics of this Index may differ materially (more or less) from that of this trading program since it is an unmanaged Index which cannot be invested in directly. The performance of the Index is not meant to imply that investors should consider an investment in this trading program, which is actively managed, as comparable to an investment in the "blue chip" stocks that comprise the S&P 500 Total Return Index.

The performance information set forth in this presentation is based upon and derived from information and data provided by SPL. HWM has not independently verified any such information and shall have no liability or responsibility for any inaccuracy or inadequacy thereof.

Statistics for “Worst Drawdown” are calculated as of month-end. Drawdowns within a month may have been greater. PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. Mutual funds carry their own expenses which are outlined in the fund’s prospectus. An account with any Advisor is not a bank account and is not guaranteed by FDIC or any other governmental agency.

When reviewing past performance records, it is important to note that different accounts, even though they are traded pursuant to the same strategy, can have varying results. The reasons for this include: i) the period of time in which the accounts are active; ii) the timing of contributions and withdrawals; iii) the account size; iv) the minimum investment requirements and/or withdrawal restrictions; and v) the rate of brokerage commissions and transaction fees charged to an account. There can be no assurance that an account opened by any person will achieve performance returns similar to those provided herein for accounts traded pursuant to the Alpha Advantage trading program.

In addition, you should be aware that (i) the Alpha Advantage program is speculative and involves a high degree of risk; (ii) the Alpha Advantage program’s performance may be volatile; (iii) an investor could lose all or a substantial amount of his or her investment in the program; (iv) Scotia Partners, Ltd. will have trading authority over an investor’s account and the use of a single program could mean lack of diversification and consequently higher risk; and (v) the Alpha Advantage program’s fees and expenses (if any) will reduce an investor’s trading profits, or increase any trading losses.

Returns illustrated are net of underlying mutual fund management fees, and other fund expenses such as 12b-1 fees. Management fees are deducted quarterly and are not accrued on a month-by-month basis. They do not include the effect of annual IRA fees or mutual fund sales charges, if applicable. The program trades frequently and most gains or losses will be short-term in nature. No adjustment has been made for income tax liability. Consult your tax advisor. “Annualized” returns take into account compounding of earnings over the course of an investment’s actual track record. Dividends and capital gains have been reinvested. Money market funds are not bank accounts, do not carry deposit insurance, and do involve risk of loss. The results shown are for a limited time period and may not be representative of the results that would be achieved over a full market cycle or in different economic and market environments. Different economic and market conditions could produce different results.

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