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Lurie Wealth Advisors

Lurie Remains Fully Operational During Minnesota Governor’s ‘Stay at Home’ Executive Order

To our valued clients and our Minnesota community –


On March 28, the ‘Stay at Home’ Executive Order issued by Governor Tim Walz took effect.
It directed all Minnesotans to work together by limiting movements outside of the home in the fight
against COVID-19.


Lurie Operations Will Continue

Lurie, LLP remains fully operational. Our team is successfully operating under a full-fledged “work from
home” policy that leverages our technology to serve clients remotely while our office is closed to visitors.
You can continue to drop off materials either in our vestibule (Monday through Friday, 8:00 AM – 5:00
PM) or through the mail slot in the door to the right of our main entrance. We are also receiving mail on a
daily basis.


Health & Safety is Our Top Priority


The health and safety of our staff, along with our clients and community, remain our top priority. Lurie is
dedicated to doing things right, and fueled by the desire to help our community. Together, we will
overcome this unprecedented health and economic challenge.


Our Team’s Role & Commitment


Lurie falls under the definition of a Critical Sector in the Executive Order. Together, we play a vital role in
the operation and viability of the economic relief programs being put in place at the state and federal
levels. We are working with businesses and individuals to connect them with programs that keep more
workers employed in our state and more businesses viable in the long-term. For ongoing updates and
resources, please go to the Lurie, LLP COVID‐19 Information & Resources Page.


If you have questions, we encourage you to please contact us. We will be here for you, your business,
your employees and your family – without interruption. Thank you.


– Team Lurie

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Qualified Opportunity Funds: A new weapon in the estate planning arsenal

The Tax Cuts and Jobs Act created a new program to encourage investment in economically distressed areas through generous tax incentives. The Qualified Opportunity Zone (QOZ) program relies on investments in Qualified Opportunity Funds (QOFs) — funds that can provide wealthy taxpayers with some new avenues for estate planning.

3 big tax benefits

Investors in QOFs stand to reap three significant tax breaks:

  1. They can defer capital gains on the disposition of appreciated property by reinvesting the gains in a QOF within 180 days of disposition. The tax is deferred until the QOF investment is sold or Dec. 31, 2026, whichever is earlier.
  2. Depending on how long they hold their QOF investment, they can eliminate 10% to 15% of the tax.
  3. After 10 years, post-acquisition appreciation on the investment is tax-exempt.

By incorporating QOFs in your estate planning, you can reduce both capital gains and transfer tax liabilities.

Estate planning implications

Proposed regulations make clear that a QOF investor’s death isn’t an “inclusion event” that would trigger tax on the deferred gains. In addition, most of the activities involved in administering an estate or trust (for example, transferring the interest to the estate or distributing the interest) won’t trigger the gain. But the sale of the QOF interest by the estate, the trust or a beneficiary would. Gifts of QOF interests also are generally considered inclusion events that make the deferred gains immediately taxable.

You could avoid this, though, by gifting your interest to a grantor trust. Both revocable living trusts and irrevocable grantor trusts qualify. However, transfers to the latter are completed gifts and therefore produce greater potential tax savings in situations where the income and gains of the trust are taxed to the grantor, in turn reducing the grantor’s estate by the amount of income taxes paid. (Note, though, that the termination of grantor trust status for reasons other than the grantor’s death is treated as an inclusion event.)

For example, you could transfer a highly appreciated asset to an irrevocable trust with no gift tax under the federal gift and estate tax exemption ($11.40 million for 2019 and $11.58 million for 2020). The trust could sell the asset and defer the gains into a QOF investment.

Another option for transferring QOF interests is the grantor retained annuity trust (GRAT), which allows you to make a gift to a trust and receive an annuity interest roughly equal to the fair market value of the gift. Any appreciation beyond the amount required to pay the annuity also passes to the beneficiaries without gift tax.

Contact Lurie Wealth Advisors for additional information or if you have questions on the Qualified Opportunity Zone program and related estate planning matters.

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Happy New Year from Lurie Wealth Advisors!

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New law results in changes to retirement accounts in 2020

 

With its winter recess looming before it, Congress has engaged in a flurry of activity. Most notably, it reached agreement on a massive government wide spending package titled the Further Consolidated Appropriations Act, 2020. The legislation extends certain income tax provisions that had expired, as well as some that were due to expire at the end of 2019. To the surprise of some, the agreement also includes the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which is the first significant retirement-related legislation since the Pension Protection Act of 2006.

 

Changes to retirement plans

The SECURE Act is packed with more than two dozen provisions primarily intended to encourage saving for retirement. Most of the provisions take effect January 1, 2020. They include measures affecting both individuals and businesses.

For example, under current law, individuals are prohibited from contributing to traditional IRAs after they reach age 70½, regardless of whether they’re still working. The SECURE Act eliminates that restriction so that anyone can contribute as long as they’re working, matching the existing rules for 401(k) plans and Roth IRAs.

The SECURE Act raises the age at which taxpayers generally must begin to take their required minimum distributions (RMDs) from 70½ to 72. The new rule applies only to those individuals who haven’t reached the age of 70½ by the end of 2019.

The law also includes a new exemption from the 10% tax penalty on early withdrawals from retirement accounts. Taxpayers can withdraw an aggregate of $5,000 from a plan without penalty within one year of the birth of a child or an adoption becoming final.

Less favorably for individual taxpayers, the SECURE Act eliminates the “stretch” RMD provisions that have permitted beneficiaries of inherited retirement accounts to spread the distributions over their life expectancies. This allowed younger beneficiaries to take smaller distributions while growing the accounts and deferring taxes.

Now, most non-spouse beneficiaries must take their distributions over a 10-year period beginning on the deceased’s death. That could increase the tax burden by pushing the distributions into years when the beneficiary is working and in higher tax brackets. The change, therefore, could require some modifications to estate plans, particularly if the plans include trustee-managed inherited IRAs with guardrails to prevent young beneficiaries from quickly draining the accounts.

On the business side, the SECURE Act expands access to open multiple employer plans (MEPs). MEPs give smaller, unrelated businesses the opportunity to team up to provide defined contribution plans at a lower cost, due to economies of scale, with looser fiduciary duties. It also provides tax credits to employers for starting retirement plans and automatically enrolling employees.

In addition, the new law paves the way for employers to include annuities in their retirement plans by eliminating their potential liability when it comes to selecting the appropriate annuity plans. And the SECURE Act requires employers to allow participation in their retirement plans by part-time employees who’ve worked at least 1,000 hours in one year (about 20 hours per week) or three consecutive years of at least 500 hours.

 

Action required

Changes to the laws for retirement savings may require a rethinking of both retirement and estate planning. Contact Lurie Wealth Advisors to help you navigate through the new law changes related to retirement savings.

 

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Expanded 529 plans offer unique estate planning benefits

If you’re putting aside money for college or other educational expenses, consider a tax-advantaged 529 savings plan. Also known as “college savings plans,” 529 plans were expanded by the Tax Cuts and Jobs Act (TCJA) to cover elementary and secondary school expenses as well. And while these plans are best known as an educational funding vehicle, they also offer estate planning benefits.

 

What do 529 plans cover?

529 plans allow you to contribute a substantial amount of cash (lifetime contribution limits can reach as high as $350,000 or more, depending on the plan) to a tax-advantaged investment account. Like a Roth IRA, contributions are nondeductible, but funds grow tax-deferred and earnings may be withdrawn tax-free provided they’re used for “qualified education expenses.” Qualified expenses include tuition, fees, books, supplies, equipment, room and board and, under the TCJA, up to $10,000 per year in elementary or secondary school expenses. Earnings used for other purposes are subject to income tax and a 10% penalty.

 

What are the estate planning benefits?

These plans are unique among estate planning vehicles. Ordinarily, to shield assets from estate taxes, you must permanently relinquish all control over them. But contributions to a 529 plan are considered “completed gifts” — which means the assets are removed from your taxable estate, together with all future earnings on those assets — even though you retain considerable control over the money. For example, unlike most other estate planning vehicles, you can control the timing of distributions, change beneficiaries, move the funds into another 529 plan, or even cancel the plan and get your money back (subject to taxes and penalties). As a completed gift, a 529 plan contribution is eligible for the annual gift tax exclusion (currently $15,000). But unlike other vehicles, you can bunch up to five years’ worth of annual exclusions into one year. This allows you to contribute up to $75,000 in one year, without triggering gift or generation-skipping transfer (GST) taxes and without using up any of your lifetime exemption. There are implications, however, if you don’t survive the five years.

 

Why does it matter?

You might think that these benefits are of little value now that the TCJA has temporarily doubled the lifetime gift and estate tax exemption to an inflation-adjusted $10 million ($20 million for married couples who design their estate plans properly). This year, the exemption amount is $11.4 million ($22.8 million for married couples). After all, few families are currently affected by these taxes. But it’s still a good idea to shield wealth from potential estate taxes and to make the most of your annual exclusion. This is because the new exemptions are scheduled to return to their previous levels after 2025 and there’s nothing to stop lawmakers from reducing the exemption in the future. 529 plans and other traditional estate planning tools provide some insurance against future estate tax changes.

 

Contact us to learn more about how a 529 plan can help achieve your estate planning and education goals.

 

© 2019

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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