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Lurie Wealth Advisors

IRS Extends Tax Filing Deadline to May 17; Taxpayers Still Need to Be Ready for April 15

Client Update: March 17, 2021

 

Lurie Wealth Advisors is closely following the latest Internal Revenue Service press release, stating that the Treasury Department and the IRS will delay the 2021 Individual federal tax filing deadline to May 17. While it gives taxpayers and the IRS more time, it is not yet known if states will conform to the new federal tax filing deadline.

As of now, your state tax filing deadline of April 15 may remain the same. We recommend that you still organize and send in all documents as originally planned. Please contact your CPA or Lurie Wealth Advisors for further guidance.

According to the IRS, individual tax payers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalties and interest, regardless of the amount owed. The federal tax filing deadline postponement to May 17th, 2021, only applies to individual federal income returns and tax (including tax on self-employment income) payments otherwise due April 15, 2021, not state tax payments or deposits or payments of any other type of federal tax or other entities. 

The IRS and Treasury Department's decision comes following the passage of the $1.9 trillion American Rescue Plan, which included another round of stimulus payments while also processing tax returns and refunds.

Please check back to our website for the latest updates and information. 

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The Rules Have Changed Regarding your IRAs, RMDs and Estate Plan

Many people’s estates typically include IRAs. Be aware that two major laws passed into law recently, the Setting Every Community Up for Retirement Enhancement (SECURE) Act and the Coronavirus Aid, Relief, and Economic Security (CARES) Act, have had a direct effect on IRAs.

In a nutshell, the CARES Act waives required minimum distribution (RMD) rules for IRAs (and certain defined contribution plans) for calendar year 2020.

If you’re fortunate enough that you don’t need to make withdraws from your IRA, there’s an opportunity to leave more for your heirs in your retirement plan. However, bear in mind that because the SECURE Act generally put an end to “stretch” IRAs, the estate planning benefits of inheriting IRAs are somewhat muted.

RMD rules waived

Not taking RMDs in 2020 is particularly advantageous because the amount of the distribution is based on year-end 2019 account values. Otherwise, you might be forced to liquidate account assets at depressed values during the stock market downturn. The waiver covers both 2019 RMDs required to be taken by April 1, 2020, and RMDs required for 2020. It applies for calendar years beginning after December 31, 2019.

“Stretch” IRAs eliminated Perhaps more important for some estate plans, the SECURE Act eliminates so-called “stretch” RMD provisions that have allowed the beneficiaries of inherited IRAs and defined contribution accounts to spread the distributions over their life expectancies. Younger beneficiaries could use the provision to take smaller distributions and defer taxes while their accounts grew. Under the SECURE Act, most beneficiaries must withdraw the entire balance of an account within 10 years of the owner’s death. However, they don’t have to follow any set schedule. They can wait and withdraw the entire amount at the end of 10 years if they wish.

The new rules apply only to those inheriting from someone who died after 2019. Thus, if you inherited an IRA years ago, you won’t be subject to the new rules with respect to your RMDs. However, when your beneficiaries inherit the IRA from you, they’ll be subject to the new rules.

Review your plans

The changes made by the CARES Act and the SECURE Act may have an impact on your retirement and estate plans. We can help you review your plans to ensure that they continue to meet your objectives.

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Disclosures

Securities offered through DAI Securities, LLC, member FINRA/SIPC. Advisory Services offered through AdvisorNet Wealth Management. Lurie Wealth Advisors, DAI Securities LLC, and AdvisorNet Wealth Management are separate and unaffiliated entities.

Contact Us

Lurie Wealth Advisors, LLC
2501 Wayzata Boulevard
Minneapolis, MN 55405

Phone: 612-381-8750
Fax: 612-381-6250
Email: LWA@luriewealthadvisors.com