Category: Financial Planning

There’s one silver lining to inflation: Changes made by the IRS to a number of rules could help put more money in your pocket as a taxpayer.

The changes include raising the thresholds for income tax brackets for 2023, as well as increasing the standard deduction. While the IRS makes adjustments to tax brackets annually, the 2023 changes are larger than typical increases, with the income thresholds increasing by roughly 7%. These IRS-adjusted tax brackets will apply automatically when you do your taxes for the 2023 calendar year, so no action is necessary on your part.

There are also increases in the estate tax exclusion and gift tax exclusion. For those seeking to minimize future estate taxes, reach out to your financial advisor or tax professional to further understand the impact of these changes on your unique situation.

When it comes to retirement savings, the IRS once again increased contribution limits for 401(k) plans and IRAs, which allow savers to put away more pretax dollars for retirement. For those not yet retired and working, reach out to your MPPL financial advisor to review these changes and ensure you are maximizing your potential contributions for your unique situation.

Here’s a rundown of key changes made by the IRS for 2023.

Federal Tax Brackets: 2023

Tax brackets (married filing jointly)

Tax brackets (single filers)

Changes to the standard deduction for 2023

• The standard deduction for married couples filing jointly will increase by $1,800, to $27,700 for 2023.
• For single individuals, the standard deduction will increase by $900, to $13,850.

Federal Estate and gift tax exclusions for 2023

• The federal estate tax exclusion amount for decedents who die during 2023 will rise to $12,920,000. This is an increase of $860,000 over the 2022 level. Please note, some states levy an estate tax in addition to federal estate taxes. The exclusion amount and taxes levied vary by each state so be sure to review your personal situation carefully with a financial and tax advisor.
• The annual gift tax exclusionamount is $17,000 for 2023. This is a $1,000 increase over the 2022 limit.

 Changes to retirement contributions for 2023

• Participants in 401(k), 403(b), and most 457 plans will be able to contribute up to $22,500 in 2023, up from $20,500.
• The catch-up contribution for individuals over 50 increases to $7,500, up from $6,500 this year.
• The limit on annual IRA contributions will increase to $6,500, up from $6,000, while the IRA catch-up contribution for individuals over 50 will remain at $1,000.

Closing Thoughts

While the changes described above are the ones that affect most people, there could be other changes that are relevant to your unique situation. As you think about 2023 planning, we encourage you to reach out to your MPPL financial advisor or tax advisor to ensure you are maximizing your tax savings in light of your personal situation.

MPPL Financial has offices in Duluth, MN, Grand Rapids, MN, Wausau, WI and Crystal Lake, IL. While we are based in the Midwest, we work with clients across the U.S.

Investment Advisory Services offered through Midwest Professional Planners, Ltd. (“MPPL”), 2610 Stewart Ave., Ste. 100, Wausau, WI 54401, 1-800-236-6775, an SEC-registered investment advisor. Certain representatives of MPPL are also registered representatives of, and offer securities products involving commission or transaction-based fees through APW Capital, Inc., 100 Enterprise Drive, Suite 504, Rockaway, NJ 07866, 1-800-637-3211. Member FINRA/SIPC/MSRB. MPPL is independent of APW Capital, Inc. Registration with the SEC or State Regulatory Authority does not imply a certain level of skill or expertise.

As we all know, when life doesn’t go as planned, it can create a tremendous amount of financial stress. Any unexpected change in personal circumstances such as a job loss, divorce, or illness can disrupt your sense of security. For some, extended periods of volatility in the financial markets can also contribute to financial stress. 

These rocky periods can lead to financial anxiety that manifests in many forms, including obsessive behavior like constantly checking your financial accounts or being frugal beyond reason, sleepless nights, feeling depressed, or even in some cases hoarding. If you feel stressed about money, you’re not alone. A 2022 Stress in AmericaTM survey by the American Psychological Association found that 72% of Americans reported stress about money. 

A Comprehensive Financial Plan Is Full of Knowledge

As financial advisors, we believe that having a comprehensive financial plan is an important way to cope with financial stress. While a financial plan can’t eliminate the underlying problems causing worry, it can help put you in control.  

One of the gifts of a comprehensive financial plan is that it is full of knowledge. As you know, knowledge is power. This empowerment is what ultimately helps manage financial anxiety.

The plans we create for our MPPL Financial clients act as both a roadmap and a powerful, dynamic decision-making framework that keeps them informed of the tradeoffs and implications of critical decisions they face.

For example, financial plans help answer important questions:

• Where you stand relative to important life goals, such as when you can retire, whether you can afford a vacation home, or the best ways to help pay for your grandchild’s college education.
• What your financial future may look like. How much financial flexibility do you have to sustain your desired lifestyle as circumstances change?
• How to pivot when circumstances change. We help clients determine how to adjust their finances after job loss, loss of a spouse, or divorce. Sometimes the pivot entails a change in investment strategy; other times we work with the client to adjust their spending.

Using a Financial Plan as a Decision-Making Tool 

We use dynamic financial planning software that allows us to easily conduct real-time scenario planning showing clients the potential impacts of different assumptions. The types of assumptions we can adjust frequently include things like changes to the average growth rate of your investments, amount of your spending, and amount you save. The financial plan helps assess the implications of taxes based on current law and is always updated to stay current on inflation rates.

When it comes to inflation, one common thing MPPL advisors are doing just now with clients is running scenarios using various assumptions for long-term inflation rates. This shows them their financial flexibility if inflation persists for extended periods at different levels. Our clients tell us it’s been a reassuring exercise.

The dynamic nature of the financial plans we create also lets us show clients the impact of strategic decisions such as paying down a mortgage sooner rather than later, or the potential benefits of a Roth conversion.

For clients with asset surpluses, scenario planning can highlight potential benefits of various estate planning moves, such as accelerating giving to family or accelerating charitable giving from bequests to lifetime gifts. For example, one benefit of accelerating gifts is the opportunity to see their impact while you are living.

In a nutshell, the knowledge gained from the scenario planning is intended to give you perspective so that you can make the best possible decisions with your goals in mind.

Closing Thoughts

Times of turbulence remind us that financial stress and risk are real concerns everyone needs to address. By having a comprehensive financial plan and working closely with a trusted financial advisor, you will be able to focus on the things you can influence and control in your life. Ultimately, the knowledge and confidence you gain to make informed decisions can help you achieve peace of mind about your finances and enjoy the beauty of life.

MPPL Financial has offices in Duluth, MN, Grand Rapids, MN, Wausau, WI and Crystal Lake, IL.  While we’re located in the Midwest, we work with clients across the entire U.S.

Investment Advisory Services offered through Midwest Professional Planners, Ltd. (“MPPL”), 2610 Stewart Ave., Ste. 100, Wausau, WI 54401, 1-800-236-6775, an SEC-registered investment advisor. Certain representatives of MPPL are also registered representatives of, and offer securities products involving commission or transaction-based fees through APW Capital, Inc., 100 Enterprise Drive, Suite 504, Rockaway, NJ 07866, 1-800-637-3211. Member FINRA/SIPC/MSRB. MPPL is independent of APW Capital, Inc. Registration with the SEC or State Regulatory Authority does not imply a certain level of skill or expertise.

There’s good news for students who have financially generous grandparents. Beginning in the 2024-2025 academic year, grandparent-owned 529 college savings plans will no longer be a headache for students seeking federal financial aid.

Previously, distributions from such plans negatively impacted the student’s eligibility to receive needs-based financial aid, with the potential to reduce aid by as much as half of the distribution. For example, a student receiving a $50,000 distribution from a grandparent-owned 529 plan in any given year could reduce needs-based financial aid eligibility by as much as $25,000. This made it especially challenging for grandparents to provide meaningful financial support.

However, upcoming changes to the Free Application for Federal Student Aid (FAFSA®) are making grandparent-owned 529 plans more powerful than ever. Students will no longer need to disclose cash support and other types of income, including distributions from these accounts.

How Does the FAFSA® Work?

The FAFSA is an online form issued by the federal government. It is used to calculate eligibility for needs-based student financial aid, based on several pieces of information:

• The cost of attendance at the school (tuition, room and board, and other related expenses)
• The student’s Expected Family Contribution, or EFC. The EFC includes assets and earnings of the parents and cash support and income of the student. For further details on how EFC is determined, visit studentaid.gov.

Several types of needs-based federal student aid programs are available to students who qualify:

• Federal Pell Grant
• Federal Supplemental Educational Opportunity Grant (FSEOG)
• Direct Subsidized Loan
• Federal Work-Study

Grandparent-Owned 529 College Savings Accounts Are More Attractive Than Ever

In general, contributions to 529 college savings accounts offer several gifting and estate planning benefits for grandparents.

If you’re a grandparent, here are a few benefits to consider:

• Contributions to 529 college savings accounts are removed from the account owner’s taxable estate. Yet, the owner (the grandparent) maintains control of the account, including how the money is invested and distributed. The latter is especially important if the named beneficiary (grandchild) decides not to attend college or receives enough scholarships that the money in the account is not needed for college expenses. What’s more, grandparents have the option to change the beneficiary on the account at any time, and can even use the money for themselves, if necessary.
• Special forward gifting provisions allow a much higher level of contributions than the annual gift exclusion. For 2022, $16,000 is the annual exclusion for individual gifts made in a single year without gift tax. Now let’s compare this to the special forward gifting provision allowed for 529 plans each year: five times the annual $16,000 exclusion. When you do the math, this amounts to $80,000 for single filers and $160,000 for joint filers. Further, there is no limit on the number of beneficiaries for whom a grandparent can do this. For example, if a set of grandparents have two grandchildren, they can jointly contribute as much as $320,000 each year without tax.

Pulling It All Together

Changes to the FAFSA® form for the 2024-2025 academic year pave the way for grandparents to help more than ever with the high cost of college education. Grandparents can maintain these estate and gifting benefits without worrying that their financial support may hurt the chances of their grandchild receiving needs-based financial aid.

To learn more about whether funding a 529 college savings plan makes sense for your financial situation, please reach out to us at MPPL Financial for an initial conversation.

We have offices in Duluth, MN, Grand Rapids, MN, Wausau, WI and Crystal Lake, IL.  While we’re located in the Midwest, we work with clients across the entire U.S.

Investment Advisory Services offered through Midwest Professional Planners, Ltd. (“MPPL”), 2610 Stewart Ave., Ste. 100, Wausau, WI 54401, 1-800-236-6775, an SEC-registered investment advisor. Certain representatives of MPPL are also registered representatives of, and offer securities products involving commission or transaction-based fees through APW Capital, Inc., 100 Enterprise Drive, Suite 504, Rockaway, NJ 07866, 1-800-637-3211. Member FINRA/SIPC/MSRB. MPPL is independent of APW Capital, Inc. Registration with the SEC or State Regulatory Authority does not imply a certain level of skill or expertise.

Contrary to what many retirees may think, selecting a Medicare Part D (prescription drug) plan is not a one-time decision.

With the high cost of prescription drugs, it’s important for all existing Medicare enrollees to carefully review Medicare Part D coverage annually to ensure their existing plan continues to be the best option for their needs.

Remember, There Are Two Ways for Retirees to Obtain Prescription Drug Coverage

If you have Original Medicare (provided by the federal government), which includes Part A (hospitalization) and Part B (medical coverage), you will likely have purchased a standalone Part D prescription drug plan from a private insurance company. You can change your Medicare Part D provider during the annual open enrollment period, without needing to change coverage for Medicare Parts A and B.

Alternatively, if you have Medicare Advantage, which is offered by private insurance companies, it will include a Part D prescription drug plan. Even with Medicare Advantage, you should still review your Part D coverage. In this situation, you will need to change your Medicare Advantage provider if there are better overall options for you.

The annual open-enrollment period is the only time Medicare beneficiaries can make changes to their prescription drug plan. So it’s important to use this window of time to review your plan in light of your current circumstances. Medicare open enrollment for 2023 coverage starts on October 15, 2022, and runs until December 7, 2022.

A Six-Point Medicare Part D Checklist to Guide Your Review

We created the following checklist to help you review your current Medicare Part D plan. It’s designed to help you determine if your current plan is still appropriate for your needs, or whether there are more attractive alternatives available. If you’re a first-time Medicare enrollee, you can also use this checklist to evaluate various Medicare Part D options.

1. Review the approved medication coverage list. Medicare Part D plans are permitted to change the medications they cover each year. Often retirees are surprised to discover this when they’re refilling a prescription for the first time in the new calendar year and have to pay for a previously approved drug.

Action step: Carefully review your current medication list and any new medications you anticipate needing against the coverage list for the upcoming year. If you discover a gap in your coverage, consider exploring whether different Part D plan can fill this gap. You can learn about what Medicare Part D drug plans cover by clicking here.

2. Understand copayments and coinsurance. Medicare Part D plans use tiered cost-sharing. This can cause some plans to change their beneficiaries’ out-of-pocket costs. Most plans will have two tiers for generic drugs, two tiers for brand-name drugs, and one tier for high-cost specialty drugs. Medications in each tier have different out-of-pocket costs.

Action step: Using the upcoming copayments and coinsurance rates, calculate whether your medications will cost more in the upcoming year and how this may impact your finances.

3. Determine the impact of deductibles. Most Medicare Part D plans charge a deductible, though they vary in magnitude. We’ve observed that some plans with low deductibles can still result in higher out-of-pocket costs, depending on copays and medications that are not covered by Part D.

Action step: Be sure to factor in the amount of any deductibles when calculating the estimated total cost for your plan to ensure it fits in with your budget and medical needs.

4. Explore options for preferred pharmacies. The majority of Medicare Part D plans offer lower cost-sharing requirements if prescriptions are filled at selected network pharmacies. The reduction in copayments can be meaningful.

Action step: Start by reviewing whether your current pharmacy is part of the network with the preferred cost sharing. If not, explore whether any of the preferred pharmacies are more cost effective for the medications you take. Keep in mind that the preferred list of pharmacies can also change; if the pharmacy you are using is already in the preferred network, make certain it will continue to be so in the upcoming new year.

5. Check for medication restrictions. It’s quite common for some plans to require prior authorization before covering certain drugs, or require patients to try a lower-cost drug before a more expensive one. We often hear from clients that the prior authorization process can be a nuisance or that they are frustrated to have to change a drug that they felt was working for them.

Action step: Identify any restrictions in any prospective Medicare Part D plan so that you can proactively reach out to your physician for prior authorization if you want to continue with a medication that is not approved.

These approvals are typically valid for one year. So be certain to put a reminder on your calendar to renew any prior authorizations you have in place. We encourage clients to take this extra step so they are not caught paying full price for expensive prescriptions.

6. Compare premium prices. Premiums often increase over time, so it’s important to review whether your current plan continues to make sense for your coverage needs. Your goal is to make certain you are not overpaying for prescription drugs for your situation when taking into account the premium, plus all of the above items in this checklist.

Action step: Estimate your total prescription drug costs by calculating your annual premiums, copays, deductibles, and any medication restrictions that could result in out-of-pocket costs. Conduct this same exercise with other plan options to ensure the plan you select meets your needs.

Pulling It All Together: Finalizing Your Medicare Part D Plan

Your financial advisor at MPPL Financial is here to help. We welcome working closely with you to review the appropriateness of your plan before the enrollment window closes.

Investment Advisory Services offered through Midwest Professional Planners, Ltd. (“MPPL”), 2610 Stewart Ave., Ste. 100, Wausau, WI 54401, 1-800-236-6775, an SEC-registered investment advisor. Certain representatives of MPPL are also registered representatives of, and offer securities products involving commission or transaction-based fees through APW Capital, Inc., 100 Enterprise Drive, Suite 504, Rockaway, NJ 07866, 1-800-637-3211. Member FINRA/SIPC/MSRB. MPPL is independent of APW Capital, Inc. Registration with the SEC or State Regulatory Authority does not imply a certain level of skill or expertise.

If you already have an estate plan in place, it does not always guarantee it addresses all of your current needs and intentions. Life is fluid. Circumstances change, often unexpectedly, making it important to protect yourself and those you love. This is why we encourage you to review your estate plan at least every five years, or more frequently.

If you don’t have an estate plan in place, please don’t procrastinate. We often tell our MPPL Financial clients that they are never too young to have an estate plan. If you have minor children or expect to have children in the future, it’s important to have at least a simple estate plan that provides for their care and protection.

Whether you’re reviewing an existing plan or embarking on your first plan, here are the questions every estate plan needs to answer. These questions will help you thoughtfully crystallize and articulate your wishes about protecting yourself and those you love, today and in the future before meeting with an estate planning attorney.

Questions to Consider Before Meeting with an Estate Planning Attorney

• Who have you chosen as the guardians of your minor children? We encourage clients to consider the values and character of the individuals they appoint.
• Do your choices for designated health care directives and powers of attorney represent individuals you have high confidence in to act according to your wishes?
• How do you want to treat your children? How children are treated is one of the most sensitive topics we encounter when helping clients prepare an estate plan.
  • Do you treat children equally during your lifetime as well as when assets from the estate are distributed?
  • How do you treat more successful versus less successful children?
  • How do you treat responsible versus irresponsible children?

• Do you have a child or grandchild with special needs, requirements for medical care, or circumstances that may warrant an unequal distribution of assets? If so, how does your estate plan address those needs?
• Do you want to protect assets from your child’s current or future spouse? If so, are there appropriate measures in place such as prenups or trusts to protect assets earmarked for your child?
• What if there are multiple marriages for you, your spouse, or your children? How do you want to address the distribution of your assets in such situations? While it may be difficult to imagine this could happen in your family, we often encounter these situations more often than not where no advance planning or thought was given to multiple marriages.
• If young children or grandchildren are involved, how do you want them to access funds distributed from your estate? The children’s age and maturity level often factor into decisions in this area, as do your values around when it is appropriate for them to receive funds.
• How will you protect distributed assets from potential creditors? We live in a litigious society. Accidents happen and surprises occur, so it’s very important to ensure your estate plan addresses these types of unanticipated situations.
• Are any existing trusts you have in place appropriate for how your family has evolved over time? “Dusty trusts,” those older than five years should be reviewed, along with all estate planning documents, to keep up with family needs and any new (or potential) legislation since they were established. An estate planning attorney can update such documents to reflect changing needs and state laws.
• What type of impact do you want to make in society? Some clients have the means to make meaningful charitable gifts throughout their lifetimes. For others, it may be best to give in smaller amounts and then leave any larger gifts as a bequest after death. We work closely with clients to determine what’s best for their personal situation.

How MPPL Financial Can Help

The questions we raised are not easy or straightforward for most to answer. That’s why, at MPPL Financial, we work closely with clients before they meet with an estate-planning attorney to draft new or updated documents. We have candid conversations about these questions, while also preparing a written financial plan the client can rely upon and share with their estate-planning attorneys

The plan includes three key elements:

• Documentation of lifetime and legacy goals and wishes
• Specific ways the client can accomplish their lifetime and legacy goals
• A balance sheet that lists all of their assets, with current values and ownership structure

This plan clarifies how they want to live their lives, along with the legacy they want to leave behind. It also helps the estate-planning attorney accomplish their desired outcomes more efficiently.

If you would like to revisit an existing estate plan or initiate one, we encourage you to reach out to us so that we can help ensure your estate plan addresses the questions that are important to you and your family.

MPPL Financial has offices in Duluth, MN, Grand Rapids, MN, Wausau, WI, and Crystal Lake, IL. While we’re based in the Midwest, we work with clients across the U.S.

Investment Advisory Services offered through Midwest Professional Planners, Ltd. (“MPPL”), 2610 Stewart Ave., Ste. 100, Wausau, WI 54401, 1-800-236-6775, an SEC-registered investment advisor.

Many people approaching retirement incorrectly believe that their health care costs will be fully covered once they reach 65, the magical year they become eligible to enroll in Medicare. After all, it’s not surprising that pre-retirees think that because they paid the 1.45% Medicare tax on their annual earnings over the course of their working years, it will cover their medical expenses in retirement.

However, without proper planning, health care in retirement can be costly and complicated to address. To begin to understand the complexities of Medicare in retirement, consider these points.

#1. Medicare coverage is spotty and limited. Medicare has four parts: A through D. Each part covers different things.

• Medicare Part A is free if you paid into the system over the course of your working years. It covers hospital stays, as well as rehab (skilled nursing), home health care, hospice, and nursing home care. However, long-term nursing home care (beyond 90 days) is not covered by Medicare.

• Medicare Part B covers doctor visits and the care your physician or medical specialist provides. There is a premium for this coverage, and Medicare covers 80% of these costs after you meet your Part B deductible for the calendar year.

• Medicare Part D is a voluntary prescription drug plan offered by private insurers that are approved by Medicare. If you take medication, or anticipate needing to, and don’t want to pay out of pocket for it, you will need Part D insurance. There is a separate premium for this coverage. It often includes co-pays. Not all medication is covered. Medicare issues a list each year of what’s covered.

• Medicare Part C, often referred to as Medicare Advantage, provides the coverage offered in A, B, and D. Part C is offered by a private insurer that has been pre-approved by Medicare. It is network specific, which some may find limiting if choice of providers is a priority for you.

Hearing, dental, and vision are not covered by any parts of Medicare described above.

#2. Your income drives Medicare Part B premiums. As noted above, everyone pays a premium for Part B, which is $148.50 per month for 2021. Depending on your modified adjusted gross income as reported on your IRS tax return from two years ago, you may be subject to an Income Related Monthly Adjustment Amount (IRMAA), which is an extra charge added to your premium. These charges can be significant; careful planning with your tax and financial advisor in advance of going on Medicare in retirement can help mitigate the potential magnitude of the IRMAA.

#3. Even with Medicare, you still need to plan for long-term care. Before even thinking about long-term care, it’s important to plan for how to financially address co-pays and limits to coverage, along with expenses associated with hearing, dental, and vision—whether that’s through additional insurance or out of pocket. Beyond such costs, it’s critical to understand that the need for long-term care can wreak financial havoc on anyone with a nest egg accrued over a lifetime. Whether one needs nursing home care or in-home care, the costs can be prohibitive and are the financial burden of the recipient.

Two Parts to Planning for Long-Term Care

Given the risks associated with needing long-term care, we encourage each and every individual, regardless of their financial situation, to thoughtfully address long-term care planning well before retirement, with their family and trusted financial advisor.

• Candid and periodic conversations with family members to understand what level of care they are not only willing to offer, but truly capable of providing, should the need arise.

• In-depth discussions with your trusted financial advisor to help determine the best ways to plan and pay for such care. 

Everyone’s family and financial situation are different. They also evolve over time with expected and unanticipated events. As such, we believe preparation is the key to enjoying a retirement that minimizes the financial worries and surprises associated with health care expenses. We at MPPL Financial have witnessed, time and time again, that proactively addressing this important issue can protect not only one’s retirement nest egg, but family relationships as well.

To better understand Medicare in retirement, we encourage you to reach out to us to help you navigate this important area of your life.

MPPL Financial has offices in Duluth and Grand Rapids, MN, Wausau, WI and Crystal Lake, IL. While we’re located in the Midwest, we work closely with clients across the U.S.

Investment Advisory Services offered through Midwest Professional Planners, Ltd. (“MPPL”), 2610 Stewart Ave., Ste. 100, Wausau, WI 54401, 1-800-236-6775, an SEC-registered investment advisor. Certain representatives of MPPL are also registered representatives of, and offer securities products involving commission or transaction based fees through APW Capital, Inc., 100 Enterprise Drive, Suite 504, Rockaway, NJ 07866, 1-800-637-3211. Member FINRA/SIPC/MSRB. MPPL is independent of APW Capital, Inc. Registration with the SEC or State Regulatory Authority does not imply a certain level of skill or expertise.

Many are surprised to discover that the SECURE Act of 2019 accelerated the tax burden for those who would become IRA beneficiaries in 2020 and beyond. It is also upending estate plans for many retirement account owners who plan on leaving these accounts to non-spouse heirs.

The Setting Every Community Up for Retirement Enhancement Act of 2019, otherwise called the SECURE Act, was signed into law on Dec. 20, 2019—just before the pandemic hit. This is a far-reaching piece of legislation, with several significant provisions intended to help individuals better prepare for retirement. 

However, there’s one major downside to the new law. That’s the elimination of the Stretch IRA for most non-spouse inheritors. As a result of the SECURE Act, most non-spouses inheriting IRAs are required to take distributions that empty the account within 10 years after the original owner’s death. This rule applies to traditional and Roth IRAs—even though distributions from a Roth IRA are not taxable. It even applies to 401(k)s and other defined contribution accounts.

Previously, the Stretch IRA allowed the inheritor to extend distributions over their lifetime, with RMDs calculated using life expectancy tables. In essence, the Stretch IRA was a valuable wealth-building tool that is no longer available to many recent, and future, beneficiaries.

Some Inheritors Are Spared

The IRS created a narrow list of eligible designated beneficiaries who can still use the Stretch IRA and take distributions based on their life expectancy:

• A surviving spouse.
• A minor child of the deceased IRA owner. Though, take note, when the child reaches majority age as determined by their state of residence, the 10-year window takes effect.
• A disabled or chronically ill beneficiary.
• A beneficiary who is not more than 10 years younger than the deceased IRA owner.

It’s important to always check with a tax or financial advisor to confirm whether a designated beneficiary is eligible for these exceptions. Penalties are high for noncompliance with distribution rules. Someone who fails to distribute the IRA on time faces a penalty of 50% of the amount that was supposed to be withdrawn but was not. Under current law, 2020 and beyond IRA inheritors who are not considered an eligible designated beneficiary must fully distribute the account.

Does Inheriting My Mother or Father’s IRA Mean That I Have to Pay More Taxes under the Current Rules?

We’ve been hearing this question quite a bit. Distributing an inherited IRA balance over 10 years, versus over your lifetime, will accelerate your receipt of taxable income. In situations where someone inherits a large traditional IRA, distributions from that inherited IRA could very easily push the beneficiary into one or more higher tax brackets, depending on the strategy in place to empty the account.

If you’ve inherited an IRA since January 1, 2020, you may want to consider working with a trusted financial advisor to help guide you in planning the most tax-efficient way to take yearly distributions from the account during the 10-year window so that you maximize the potential value of the gift received.

What if you recently inherited or are about to inherit a traditional IRA and don’t qualify to keep the Stretch? You’ll need to carefully plan how to take distributions over the 10-year window so that you’re not unnecessarily pushed into higher tax brackets from the extra income.  

Estate Planning Considerations

What if you’re a traditional IRA owner planning to leave the account to someone other than your spouse? Roth conversions and distributions to qualified charities are among the various strategies worth exploring. As always, it’s important to work closely with your financial advisor to determine your income needs from the traditional IRA.

Everyone’s Situation Is Unique

To maximize the value of an inherited IRA, consider working closely with a trusted financial professional to identify the best strategies for your personal situation.

Investment Advisory Services offered through Midwest Professional Planners, Ltd. (“MPPL”), 2610 Stewart Ave., Ste. 100, Wausau, WI 54401, 1-800-236-6775, an SEC-registered investment advisor. Certain representatives of MPPL are also registered representatives of, and offer securities products involving commission or transaction based fees through APW Capital, Inc., 100 Enterprise Drive, Suite 504, Rockaway, NJ 07866, 1-800-637-3211. Member FINRA/SIPC/MSRB. MPPL is independent of APW Capital, Inc. Registration with the SEC or State Regulatory Authority does not imply a certain level of skill or expertise.

Reducing your financial clutter is one step in the process of gaining control over your personal finances and becoming more organized. What’s more, it also provides a way to review and ensure you are taking adequate measures for information security.

Here are five steps to reduce your financial clutter that we often share with clients:

#1: Decide what to keep

There are some items we encourage you to keep forever. To reduce the financial clutter, you may want to keep these items in a safe-deposit box and also take pictures of the hard copies with a smartphone. See our discussion below for storage of electronic files.

• Birth/death certificates
• Employer defined-benefit plan communications
• Estate-planning documents (don’t forget to give copies to your advisor and executor)
• Active life insurance policies
• Marriage licenses/divorce decrees
• Military discharge papers
• Safe-deposit box inventory
• Social Security cards
• Pension documents

#2: Decide what to discard

Keep these guidelines in mind for the following items:

In the spirit of information security, shred hard copies of what you don’t need.

Strive to move toward electronic statements for items you currently receive as hard copy.  You can keep electronic versions, as well as any scanned items, in an online secure vault. For online files, delete those that are no longer necessary to keep. As part of the firm’s financial planning software, MPPL clients have access to an encrypted vault to keep backups of that data.

#3: Take an inventory of important information

Consider these essential items:

• Using your smartphone, make a video of your home. Document both the inside and outside of the home. Don’t forget your garage, vehicles, and other structures such as an in-ground swimming pool or shed. Photograph new possessions and record their value.
• Keep a list of all your financial accounts, life insurance policies, credit cards, and safe deposit boxes for your survivors in the event of premature death. This list should also include essential contacts such as your financial advisor, CPA, attorney, etc.

#4: Put a backup plan in place for electronic records

After you scan or download your records, don’t forget to create a backup on a separate hard drive or cloud storage system to prevent future data loss, if you are not already a MPPL client using the encrypted online vault the firm makes available to its clients. 

#5: Regularly review your accounts

• Consolidate your bank and brokerage accounts, closing any inactive or redundant ones.
• Shred any unused checks. This is also a good time to examine the banking fees you pay and shop for other options that would reduce or eliminate these charges.

Investment Advisory Services offered through Midwest Professional Planners, Ltd. (“MPPL”), 2610 Stewart Ave., Ste. 100, Wausau, WI 54401, 1-800-236-6775, an SEC-registered investment advisor. Certain representatives of MPPL are also registered representatives of, and offer securities products involving commission or transaction based fees through APW Capital, Inc., 100 Enterprise Drive, Suite 504, Rockaway, NJ 07866, 1-800-637-3211. Member FINRA/SIPC/MSRB. MPPL is independent of APW Capital, Inc. Registration with the SEC or State Regulatory Authority does not imply a certain level of skill or expertise.