TAX NOTIFICATION: Retirement Planning Revamped Under The SECURE Act


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By Sasha A. Klein

Happy New Year!!  In the tax world, it wouldn’t be a New Year without tax legislation impacting your planning. Welcome to 2020 and with it, new significant tax legislation that may have a meaningful impact on your retirement planning.

What’s important to know? 

NAME: The Setting Every Community Up for Retirement Enhancement Act of 2019 (the “SECURE” Act) was signed into law on December 20, 2019.

EFFECTIVE: The SECURE Act is effective January 1, 2020.

CHANGES: The Most Notable Changes to Retirement Planning under The SECURE Act:

  • Elimination of the “Stretch” IRA. Elimination of the ability to “stretch” certain inherited retirement accounts over a designated beneficiary’s life expectancy.
  • Raises RMD Age. Raises the age at which required minimum distributions (RMDs) must begin from the year the taxpayer attains age 70 ½ to 72.

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New Overtime Rules in 2020 – Employers, Are You Ready?

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By Bari Goldstein and Ken Rehns

Before employers start planning Thanksgiving potlucks or holiday parties, they need to set some time aside to ensure that they are in full compliance with the new Overtime Rules that will impact exempt employees on January 1, 2020.

Among other things, the Fair Labor Standards Act, or the FLSA, requires employers to compensate covered, non-exempt employees for overtime at a rate of one and one-half times the regular rate of pay for all hours worked above forty hours in a workweek.  To be exempt from this general rule, employee positions must satisfy strictly enforced and narrowly construedduties tests” under the FLSA.

Employers must understand that job titles do not determine exempt status and neither do statements or provisions included in employment agreements; rather, for an exemption to apply, an employee’s specific and actual job duties and salary must meet all the requirements of the FLSA.  An exemption is determined by what the employee does on a day-to-day basis and not by a description appearing in any job description or company handbook.  Finally, the burden of properly classifying an employee always rests with the employer exclusively; and the risks associated with an employer improperly classifying an employee are extensive. Continue reading

Foreign Investors Selling U.S. Property – What Are The Rules?

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By Colleen B. Sullivan

Many foreign investors are inquiring about how their foreign tax status will affect their sale of U.S. property.  The answer to this question is…it depends!

Foreign investors may be subject to a tax when selling real estate located within the United States. This tax is imposed by the Foreign Investment in Real Property Tax Act (“FIRPTA”). FIRPTA requires any “foreign person” (a term that includes foreign companies, or certain U.S. companies owned by foreign persons) selling property located in the U.S. to file a tax return and pay taxes on their gain. The closing process facilitates this requirement, making the Seller’s choice of real estate and tax professionals an extremely important decision.

Who Owes What?

Because a foreign person may not have any current or future assets in the United States for the IRS to claim, FIRPTA makes it the responsibility of the Buyer purchasing the property to withhold Seller’s funds. This is an extra protection for the IRS to guaranty that the FIRPTA tax is paid when due.

It is important to note the actual tax owed is not necessarily the withholding amount. The Seller’s withholding amount is an added protection which guaranties payment of the Seller’s actual tax due. At closing, and after the proper forms are submitted to the IRS, a certificate stating the actual tax obligation is provided to the Seller, and the funds are applied accordingly. The actual tax obligation is often significantly less than the withholding requirement. As a result, FIRPTA withholding can have a major impact on the closing process for a foreign seller. Because this is a complex requirement, this withholding should be handled by an experienced closing agent. Continue reading

Getting Married or Divorced? No More Taxes on your Marital Home!

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By Dane Leitner

In its last spring session the Florida Legislature revised a law for inter-spousal transfers of homestead property.  Section 201.02, Florida Statutes imposes documentary stamp tax on most conveyances between spouses if there is an underlying mortgage.  So, in Florida, when you get married and want to transfer property (add your spouse’s name to your home), a documentary stamp tax or “real estate transfer fee” is applied to the unpaid balance of the mortgage.  The Florida documentary stamp tax rate is $0.70 per $100 paid for the property, in all counties except Miami-Dade.

For example, if the husband owned the property prior to the marriage, then added his wife once married, and there was a mortgage balance of $400,000.00, the Department of Revenue would collect documentary stamp tax on half of the mortgage balance.  In this example the taxes would be around $2,800.00.

Previously, there was an exemption for the conveyance of the marital home when the parties divorced and the property was transferred.  However, there was no such exception if you wanted to add your spouse once married.  In 2018, the Florida Legislature amended the statute providing an exception for inter-spousal conveyance of homestead property if the conveyance was completed within one year of marriage.  While this was a good change, it only applied to parties that were getting married in the future, and as long as they conveyed the property within one year of the marriage. Continue reading

Reverse Mortgages: Helping or Hurting Seniors?

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By Michael J Posner

Recently an editorial published in USA Today on June 13, 2019 (read here: tinyurl.com/y36lvwjp) basically viewed reverse mortgages as simply predatory lending designed to steal seniors’ and the heirs’ homes without any benefit or knowledge.  As a board-certified real estate attorney and Florida HUD Commissioner who has seen and dealt with many reverse mortgage foreclosures, I do not agree with this perspective for a number of reasons explained below.

First, the editorial fails to clearly discuss several important facts:

  1. Without the loans, many seniors would have been forced to sell the homes anyway, due to the inability to pay maintenance costs (such as major structural repairs, and roofs), existing loans (which may be burdensome), or taxes and insurance;
  2. No one forced these seniors to take the loans and spend the money they received, even if spent frivolously;
  3. A majority of foreclosures occur not due to defaults relating to non-payment of taxes or insurance, but due to either abandonment of the home (residing in the home is a condition of getting and keeping the loan) or death;
  4. Claiming that the heirs lost out on getting the home due to the reverse mortgage is a false premise, because it presupposes that the heirs deserve the home even though their parents needed and got to enjoy the benefits of the reverse mortgage money; and
  5. Many foreclosures occur simply because reverse mortgages were granted before the crash, and the monies given were based on a higher pre-crash value. Combined with the accrued interest over 10 to 15 years (a key to how these work, seniors pay nothing during the term of the loan), and all the costs of sale (as high as 8% for real estate commissions, taxes, transfer taxes and title insurance), there is little to no equity left to interest the heirs or the estate to consider selling the properties.

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