April is for Filing Taxes—and Time to Open and Fund a New Self-directed IRA

April is for Filing Taxes—and Time to Open and Fund a New Self-directed IRA

Tuesday, April 15, 2025 is the deadline for filing federal and state tax returns for tax year 2024. (Note that taxpayers who reside in a federally declared disaster area may have additional time to file and pay federal taxes.) But did you know you still have time to open a new IRA and make a contribution toward your 2024 taxes? If you already have an IRA, you also have until April 15 to make that tax-advantaged contribution for tax year 2024.

This applies to all types of IRAs—Traditional, Roth, SIMPLE (for small businesses), or SEP (for the self-employed). So, if you’ve been sitting on the fence pondering when to establish a retirement plan, there is still time to do so for 2024.

This also means that savvy investors who’ve been considering a self-directed IRA (SDIRA) may also open and fund a new self-directed retirement account by the deadline and apply it to their 2024 tax return. As with their regular counterparts, all types of IRAs may be self-directed, enabling account owners to build a diverse retirement portfolio that includes a broad array of alternative assets.

Real estate, precious metals, commodities, private equity funding, royalties, and more can be part of a SDIRA, providing a hedge against stock market volatility, with the potential for lucrative returns over time since these assets are not correlated with stock market activity. Plus, self-directed investors can take advantage of investment opportunities that align with their values or retirement goals more nimbly, since they make all their own investment decisions.

 

Supercharge your earning power

At Next Generation, we say that self-directing your retirement plan is a way to turbocharge your retirement savings. Taxpayers who can do so comfortably can increase their IRA’s earning power (and tax-advantaged savings) by contributing for both 2024 and 2025 by the April 15 deadline. In short, funding the self-directed IRA for 2024 up to the contribution limit plus contributing something now toward the 2025 limit enables you to boost your portfolio’s holdings and gives your investments more time to earn returns.

The contribution limits for 2024 are on our blog, here. The IRS website has published the 2025 contribution limits and changes to qualifying income ranges for all retirement plans here.

 

Making self-directed investments

1 – Open a SDIRA with an administrator that specializes in these types of retirement accounts and select a custodian that will hold the assets. Our starter kits provide step-by-step instructions for all account types.
2 – Make a contribution either with new funds or with a rollover from the same type of IRA.
3 – Identify the alternative asset you wish to include in your account.
4 – Conduct full due diligence about the asset.
5 – Send investment instructions to the self-directed IRA administrator to execute the transaction on behalf of the SDIRA.

 

Next Generation makes it easy

Next Generation covers both administrative and custodial aspects of managing self-directed investment accounts, with two sister firms under one umbrella that work together to streamline the transaction process for our clients.
• The Next Generation Services team handles all the paperwork and administrative tasks, such as maintaining accurate records of balances and transactions and submitting required reports to the IRS.
• Next Generation Trust Company is the custodian that holds and safeguards the assets within our clients’ SDIRAs and ensures compliance with IRS regulations regarding self-directed investments.

 

Boost your self-direction knowledge base

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We also invite you to check out past webinars that cover a range of topics related to alternative asset investing.

Planning on Making Early Withdrawals from Your IRA or 401(k)? Include These Tips in Your Plan.

Even the best savers may find themselves in a situation where they need to tap their retirement account before reaching age 59½, the minimum age at which an individual can take distributions without triggering (and paying) a 10% early withdrawal penalty. This rule is to encourage taxpayers to continue saving as much as they can while still working.

If you need to take an early distribution from your IRA or your employer’s 401(k) plan, you need to know the IRS rules about these “premature distributions.”

Exceptions to the early withdrawal penalty

There are certain exceptions for which an account owner can start withdrawing funds penalty free before age 59½; however, the distribution will count as taxable income, reported by the retirement plan on Form 1099-R. Taxpayers should report the distribution using Form 5329 and report the amount of the penalty or claim an exception.

Exceptions to the 10% penalty for Traditional IRAs are for using the distribution:
• To purchase a first home (up to $10,000 withdrawal allowed).
• To roll it over or transfer it to another IRA or qualified retirement plan.
• For unreimbursed medical expenses.
• For qualified education expenses.
• In cases of the account owner’s death or disability.
• For certain personal or family emergency expenses (one distribution per calendar year, up to the lesser of $1,000 or vested account balance over $1,000). These emergency distributions can be repaid within a three-year period. Failure to do so prohibits the taxpayer from taking another $1,000 distribution during the following three-year period.
• Disaster recovery (up to $22,000 to qualified individuals who sustain an economic loss due to a federally declared disaster where they live; the IRS often allows taxpayers to repay these distributions).
• For qualified expenses related to a birth or adoption (up to $5,000); the distribution can be repaid within a three-year period.
• For a survivor of domestic abuse by a spouse or domestic partner for distributions made after 12/31/2023 (up to the lesser of $10,000 or 50% of account).
• To satisfy a series of substantially equal periodic payments.
• When made due to an IRS levy.

Roth IRA rules

If the account is a Roth IRA, it must also have been open at least five years before making the withdrawal to avoid the earnings being subject to taxes and penalties.
Regarding the list above, some but not all these exceptions apply to early Roth IRA withdrawals. For a Roth IRA, the most common exceptions are:
• A first-time home purchase
• A birth or adoption expense
• A qualified education expense
• Death, disability or terminal illness
• Health insurance payment (if you are unemployed)
• Some medical expenses

NOTE: This list also applies to early withdrawals from a SIMPLE IRA or SEP IRA. If you participate in a 401(k), check with your plan administrator about any other exceptions, such as separation from service after reaching age 55 or hardship distributions.

Contact Next Generation with your questions

As you see, taking a distribution before you reach the minimum distribution age can get complicated when it comes to avoiding that 10% penalty—and remember, the distributions are usually taxable income, so you need to plan for that.

If you have questions about exceptions to the early-withdrawal penalty, we recommend you consult your trusted advisor or, if your self-directed IRA is with Next Generation Trust Company, contact our office for clarification.

 

FYI – sources

https://www.thinkadvisor.com/2025/01/08/early-ira-and-401k-withdrawals-what-to-know/?kw=Early%20IRA%20and%20401%28k%29%20Withdrawals%3A%20What%20to%20Know&utm_position=6&utm_source=email&utm_medium=enl&utm_campaign=financialplanninginsider&utm_content=20250115&utm_term=tadv&oly_enc_id=4679F3155245C9X&user_id=772b26dbff0a4792038a289127c8060c3ce7fe8d0a2abbeada08f80fad878907
https://www.schwab.com/ira/roth-ira/withdrawal-rules
https://www.irs.gov/retirement-plans/hardships-early-withdrawals-and-loans
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-on-early-distributions
https://www.fidelity.com/retirement-ira/ira-early-withdrawal#roth-ira

Investing In Hedge Funds Through a Self-Directed IRA

Investing in hedge funds through a self-directed IRA (SDIRA) is an increasingly popular strategy for those looking to diversify their retirement portfolios with alternative assets. Hedge funds offer opportunities for potentially high returns and risk management strategies that differ from traditional investments like stocks and bonds.

What is a hedge fund?

A hedge fund is a private pool of capital whose managers can buy or sell any assets. The money is pooled from multiple investors and the funds are generally more speculative in nature regarding the assets in which the managers invest. This usually large pool of capital tends to be less regulated than investments like mutual funds.

Hedge fund investors

Investors may be accredited, institutional, or individuals (such as investors with a self-directed IRA). Since the managers have flexibility in terms of the types of assets to include in a fund’s portfolio, including the alternative assets allowed in self-directed IRAs, these are becoming more attractive to more self-directed investors. When the SDIRA makes the investment, the account owner is a passive investor.

Types of hedge funds

There are several types of hedge funds that use various strategies, some designed to reduce portfolio volatility and enhance returns. The most common types are global macro hedge funds, long/short equity hedge funds, relative value hedge funds, and activist hedge funds.
• Global Macro Hedge Funds – Fund managers attempt to invest according to economic and political world events, using derivatives on bonds, currencies, equities, and commodities. These hedge funds differ in the size of the position they take, from bold investments to homing in on smaller increments to (try to) minimize volatility.
• Long/Short Equity Hedge Funds – These fund managers invest in long shares and short shares.
o Long share investment is in companies they feel provide sufficient evidence that they will do well over time.
o Short shares are when managers borrow and sell shares of companies they feel are likely to behave poorly.
• Relative Value Hedge Funds – The fund manager funds companies that are merging (merger arbitrage strategies) or enduring a takeover.
• Activist Hedge Funds – With these funds, the manager has a significant stake in a company and leverages their involvement as motivation for other investors to join.

Using a self-directed IRA to invest in hedge funds

Identify a hedge fund that aligns with your investment goals and philosophy, risk tolerance, and liquidity preferences. Some hedge funds have high minimum investment requirements and some may restrict investments from tax-advantaged accounts, so be sure to do your research and be comfortable with this type of asset.
As part of your due diligence, evaluate the hedge fund’s strategy, past performance, management team, and fee structure, and make sure you understand its lock-up periods and liquidity restrictions.
Once you’ve selected the hedge fund, send the investment instructions to your SDIRA custodian, who will process the necessary paperwork and ensure the investment complies with IRS regulations.
Remember that as with any self-directed investment, investors must avoid making a prohibited transaction (no self-dealing allowed!) to retain the tax-advantaged status of the SDIRA. The investment is made in the name of the IRA, not the account owner.

Benefits of investing in hedge funds through a self-directed IRA

In addition to portfolio diversification:
• your IRA will earn tax-advantaged growth from the fund’s gains
• you’ll have access to unique, somewhat sophisticated investment techniques unavailable in traditional markets, potentially leading to higher returns
• the hedge fund may use strategies designed to hedge against market downturns, which can be beneficial in volatile economic environments.
Self-directed investors know that investing in alternative assets—such as including hedge funds investments in their self-directed IRA—requires careful planning, regulatory compliance, and a deep understanding of the risks involved. At Next Generation, we always recommend that our clients also consult their trusted advisor about how investing in hedge funds may affect their tax or financial situation. And of course, we know that working with a knowledgeable SDIRA custodian and administrator is an important part of using self-direction as a retirement wealth-building strategy. We invite you to learn more by contacting the helpful Next Generation team at 888.857.8058 or NewAccounts@NextGenerationTrust.com.

Including Renewable Energy Investments in a Self-Directed IRA

A self-directed IRA (SDIRA) enables savvy investors to include a broad array of alternative assets within their retirement plan. Among those are renewable energy investments, which are attractive to account owners who want to include green energy assets within their SDIRA.

What is renewable energy?

Renewable energy sources are natural sources and are considered sustainable energy because, unlike fossil fuels (gas, coal, oil), they are replenished more quickly than they are consumed. Solar, wind, geothermal, and water are all able to generate power that does not cause the greenhouse gas emissions (such as CO2) that harm our atmosphere and environment.
Fossil fuels are non-renewable because they form over hundreds of millions of years (so they cannot be replenished at the same rate as the other sources, plus they create harmful emissions when burned).

Renewable energy sources

• Solar – whether the sun is shining or not, solar energy can be harnessed and converted into electricity via solar panels for many applications.
• Wind – large wind turbines on land or offshore holds tremendous potential. According to the United Nations, the world’s technical potential for wind energy exceeds global electricity production.
• Geothermal – this form of energy production extracts heat from the Earth’s interior geothermal reservoirs.
• Water – reservoirs, rivers, and the ocean all provide sources for water-generated power.
o There are two types of hydropower plants: reservoir plants that rely on stored water in a reservoir and run-of-river plants that harness energy from available river flow. Hydropower reservoirs are used to provide drinking water, irrigation, to control floods and drought conditions, navigation, and energy supply.
o Ocean energy is still developing and uses seawater’s kinetic (wave, tidal) and thermal energy to produce heat or electricity.
• Bioenergy – this is produced from biomass derived from organic materials such as charcoal, manure, wood/forestry, or biofuel from agricultural crops. Bioenergy sources generate heat and power but burning them also creates greenhouse gas emissions, although at lower levels than fossil fuels.

Investing in renewable energy sources in a SDIRA

Increasing calls of alarm about climate change have put renewable energy in the investment spotlight. The International Energy Agency’s “Net Zero by 2025” states that investments in renewables will need to triple in the coming years to reach net-zero carbon emissions, making the green energy sector a hot investment.
While anyone can invest in renewable energy sources through stocks and bonds, or mutual funds or exchange-traded funds that include these investments in their baskets, taxpayers with self-directed IRAs can include these alternative assets as direct tax-advantaged investments in additional ways.
Here are some ways to invest in clean energy or sustainable energy sources through a SDIRA:
• Real estate investments in land on which solar farms or wind farms are located
• Private equity funding or private placement in companies that invest in renewable energy commodities (tree farms, wind or solar farms)
• Investing in companies that are developing or manufacturing technologies that support clean energy, from solar panels and wind turbines to products that improve energy efficiency or mitigate carbon emissions

Next Generation is here to help

If you’d like to learn more, contact us today.

Jaime Raskulinecz of Next Generation Trust Company Alerts Family Caregivers About the Importance of Including Caregiving Expenses in Retirement Savings

ROSELAND, NJ, January 24, 2025 /24-7PressRelease/ — Many Americans are already struggling to save for retirement due to the high cost of living. Jaime Raskulinecz, CEO of Next Generation Trust Company, noted that another factor that’s throwing pre-retirees and retirees off their retirement savings target is the cost of family caregiving, which affects 53 million Americans today.

According to a study by the Columbia University Mailman School of Public Health, potential caregiving expenses average $7200 a year, a figure that puts a big dent in many people’s savings.

“The cost of caregiving also affects generational wealth, since the caregiver is less able to manage debt and accrue significant savings for retirement as well as an inheritance,” said Raskulinecz, whose firm provides administration and custodial services for self-directed retirement plans.

The Columbia University study revealed that:

Survey highlights risk of familial caregiving expenses to retirement savings
In a recent blog article on the Next Generation website, Raskulinecz cited results of the Society of Actuaries Research Institute’s biennial Retirement Risk Survey among U.S. retirees and pre-retirees aged 45 to 80 across all income levels. The initial findings showed that middle-aged and older Americans are becoming more aware of the need to financially prepare for unexpected events—and that they’ve been saving less due to the challenges of familial caregiving and inflation. For example, 38% of pre-retirees and 27% of retirees surveyed feel unprepared to take on a family member’s medical emergency or health issue.

The Next Generation article offers suggestions for individuals to prepare for the potential financial impact of family caregiving on their ability to save for retirement and shares information on several bipartisan Congressional bills.

“The Caregiver Financial Relief Act and other legislation aim to reduce the financial burden of family caregiving, and some bills will provide greater flexibility regarding contributions to retirement plans,” said Raskulinecz. “Investors who understand alternative assets can optimize their retirement savings and build a more diverse portfolio by including real estate, precious metals, private equity funding, commodities and more in a self-directed IRA. These and other nontraditional investments also create a hedge against stock market volatility because their returns are not correlated with publicly traded stocks and bonds.”

For more information about self-directed IRAs and other self-directed plans, visit https://www.NextGenerationTrust.com.

(973) 533-1880 x113

About Next Generation
Founded on the philosophy that every person should have control over their retirement plans, Next Generation educates consumers and professionals about self-directed retirement plans and nontraditional investments, a strategy at one time reserved only for the very wealthy. Next Generation Services provides comprehensive account administration and transaction support, and its sister company, Next Generation Trust Company, acts as custodian for all accounts. The neutral third-party professionals at Next Generation expertly guide clients and their trusted advisors as part of their white glove, personalized service for a seamless transaction experience from start to finish. For more information, visit www.NextGenerationTrust.com, or contact Next Generation at 888.857.8058 or NewAccounts@NextGenerationTrust.com.

Next Step to Amending Retirement Legislation: SECURE 3.0 May Come in 2025

With a new year and new administration comes new legislation, including SECURE 3.0, which is centered on improving retirement plan flexibility and retirement security for more American taxpayers. The bill affects employer-sponsored retirement plans.

Why SECURE 3.0 is being discussed

One driver of this is a new tax bill to be advanced in the Senate, which will give tax cuts to some Americans but also reduce federal tax revenue, with estimates in the $4-5 trillion range. Therefore, Congress is also eying a bipartisan SECURE 3.0 package that is being formulated as “pay-fors” for the tax bill (in other words, providing funds to pay for the revenue shortfall resulting from those tax cuts).

Senators Tim Kaine (D-Va.) and Bill Cassidy (R-La.) are preparing to introduce retirement-related bills in the U.S. Senate that could become part of this legislation. In the House, Representative French Hill (R-Ark.) now leads the House Financial Services Committee and Representative Tim Walberg (R.-Mich.) chairs the House Committee on Education and the Workforce in the 119th Congress—the two committees where retirement legislation begins. In a recent article about this matter, Financial Advisor magazine noted that both congressmen will likely be strong advocates for advancing SECURE 3.0.

Provisions of interest in SECURE 3.0

Retirement security—planning and saving for retirement—are at the heart of the legislation in progress. For example, the Senate bill includes the Helping Young Americans Save for Retirement Act, which would lower the age to participate in a workplace retirement plan from 21 to 18.

According to the U.S. Department of Labor, a plan may require an employee to be at least 21 years old and to have a year of service with the employer before becoming eligible to participate in a plan; however, an employer may allow employees to begin participation before meeting those milestones.

NOTE: This current age restriction applies to SEP IRAs but not to SIMPLE IRAs, Traditional IRAs, or Roth IRAs.

Brad Campbell served under President George W. Bush as assistant secretary for employee benefits security at the U.S. Department of Labor; he was cited in the Financial Advisor article about SECURE 3.0, saying he expects there to be “a renewed focus” on increasing retirement asset portability for workers who participate in employer-sponsored retirement plans.

While it’s too early to know what might be included in this next round, employers and workers should be on the lookout for changes to enrollment mandates, emphasis on state-sponsored IRAs for employees of small businesses, broader investment options, and tax credits for employers—provisions to enhance retirement security for workers and incentives for employers.

Open a self-directed IRA and control your retirement savings

Anyone of any age can open and fund an IRA and get on a path to stronger retirement security, without participating in an employer-sponsored retirement plan. And when you open a self-directed IRA, you open the figurative door to a broad array of alternative assets you can include in that plan. Depending on your income and financial situation, you may have both a workplace plan and an IRA (Traditional or Roth) and contribute to both to the allowed limits to build tax-advantaged retirement savings.

Self-employed individuals can open a self-directed SEP IRA, small employers may opt to offer a self-directed SIMPLE IRA (for themselves and employees), and business owners may also choose a solo(k) that is self-directed, enabling them to build a more diverse retirement portfolio.

If you’d like to learn more, contact us today.

What’s In, What’s Out This Year: Some Regulations About Retirement Plan RMDs are Delayed Until 2026

Final regulations, proposed regulations and how they may affect taxpayers with retirement plans this year and next.

When financial legislation is proposed and before final rules are enacted, there is a period of public comment. The passage of the SECURE Act and SECURE Act 2.0 gave the Internal Revenue Service, the U.S. Department of the Treasury, tax professionals and taxpayers plenty to talk about regarding proposals that affect retirement plans—both employer-sponsored and individual retirement accounts.

Background: updated RMD rules

Updated rules about required minimum distributions (RMDs) from retirement plans were passed as part of the SECURE Act of 2019 and further revised under SECURE Act 2.0 (in 2022). Back in July 2024, the agencies compared the original and subsequent revisions and decided to enact some of them as part of the final regulations while others would be addressed in new proposals. Both categories of changes—the 2024 proposed regulations and 2024 final regulations—were to take effect together on January 1, 2025 so that they would all start applying at the same time.

Commenters pushed back in September 2024, airing concerns about the implementation of the final RMD regulations; retirement plan sponsors and recordkeepers said they’d need more time to implement the changes. The agencies listened and announced in December that several aspects of the RMD rules will not apply until 2026, extending the anticipated effective date of a handful of proposed RMD regulations until January 1, 2026.

Regulations that are delayed until 2026

The covered regulations are included in the Internal Revenue Code sections 1.401(a)(9)-4, 1.401(a)(9)-5, and 1.401(a)(9)-6 and relate to defined contribution plans, defined benefit plans, and annuity contracts.

The proposed regulations affected by this delayed implementation comprise aspects of spousal election, partial annuity, Roth accounts, corrective distributions (for defined benefit and defined contribution plans), and qualified longevity annuity contracts.

Postponed changes at a glance

The following changes are delayed until distribution year 2026, giving plan and IRA sponsors and recordkeepers an extra year to finalize their implementation as they related specifically to these issues.

 

Regulations that took effect on January 1, 2025

NOTE: Given the complex revenue codes and myriad sections contained in each of the codes, taxpayers are wise to consult a trusted advisor or tax professional about how any of these may affect one’s overall financial plan and taxation scenario.

As always, the helpful professionals at Next Generation Trust Company are here to answer your questions related to self-directed IRAs and other plans in which funds may be invested in alternative assets.

Jaime Raskulinecz of Next Generation is Named to the Investment News 2024 Hot List

ROSELAND, NJ, December 23, 2024 /24-7PressRelease/ — Jaime Raskulinecz, CEO of Next Generation Trust Company, has been named to Investment News’ 2024 Hot List of Top Financial Professionals. This is the second year in a row that she has been honored with this award, which recognizes the top financial professionals in the U.S. She is among 97 movers and shakers nationwide whose contributions have helped shape the wealth industry over the past 12 months.

Next Generation specializes in the administration of and asset custody for self-directed IRAs (SDIRAs), HSAs and ESAs. The firm also offers client education about self-direction as a retirement savings strategy, to help more investors diversify their retirement portfolios with assets they already know and understand; these include real estate, precious metals, royalties, private equity funding, commodities and many more. In addition, Next Generation provides education and specialized services to wealth managers and other financial services professionals.

“I am proud of the work we’ve done through the years to help investors broaden their investments—and of the high level of client service our team delivers,” said Raskulinecz, who founded Next Generation over 20 years ago. The impetus behind that was the lack of financial services companies at the time that specialized in working with investors—like herself—who wanted to include alternative assets within their IRAs, which typically are limited to stocks, bonds and mutual funds.

Raskulinecz has won multiple awards throughout her career for entrepreneurship and business leadership. Next Generation has also been recognized numerous times for its growth and contributions to the financial industry and regional business landscape.

More information about Raskulinecz, her team, and the many options and benefits associated with self-directed retirement plans is at https://www.NextGenerationTrust.com.

About Next Generation
Founded on the philosophy that every person should have control over their retirement plans, Next Generation educates consumers and professionals about self-directed retirement plans and nontraditional investments, a strategy at one time reserved only for the very wealthy. Next Generation Services provides comprehensive account administration and transaction support, and its sister company, Next Generation Trust Company, acts as custodian for all accounts. The neutral third-party professionals at Next Generation expertly guide clients and their trusted advisors as part of their white glove, personalized service for a seamless transaction experience from start to finish. For more information, visit www.NextGenerationTrust.com, or contact Next Generation at 888.857.8058 or NewAccounts@NextGenerationTrust.com.

Retirement readiness – Include preparing for family caregiving expenses

Many Americans are already struggling to save for retirement due to the high cost of living. Another factor that’s throwing pre-retirees and retirees off their retirement savings target is the cost of family caregiving, which affects 53 million Americans today.
According to a study by the Columbia University Mailman School of Public Health, potential caregiving expenses average $7200 a year, a figure that puts a big dent in many people’s savings. The study also revealed:
• Caregivers who begin their duties at a younger age risk an average 40% to 90% deficit in retirement savings by age 65, depending on salary, compared to non-caregivers (due to reallocating retirement contributions toward caregiving costs).
o If someone earning $50,000 a year begins caregiving at age 35, that individual will see a 107.8% retirement savings deficit at 65 years old.
o For those earning $75,000 a year, the gap is 60.4% gap and for those making $100,000 a year, the deficit is 46.9% deficit.
• This deficit is equivalent to another seven to 21 years of work to recover the savings loss.

The cost of caregiving also affects generational wealth, since the caregiver is less able to manage debt and accrue significant savings—for retirement as well as an inheritance.

The Society of Actuaries (SOA) Research Institute’s biennial Retirement Risk Survey gathered insights from U.S. retirees and pre-retirees aged 45 to 80 across all income levels. Among the initial findings are middle-aged and older Americans’ growing awareness of the need to financially prepare for unexpected events—and the decrease in amount they’ve been able to save due to the challenges of familial caregiving and inflation/cost of living.
The survey also revealed that beyond the financial impact of caregiving:

• Male and female pre-retirees (36% and 26% respectively) and female retirees (35%) cited the emotional and/or physical toll.
• Male retirees (14%) cited long-term care planning as the impact of caregiving.
• Among pre-retirees, 38% feel unprepared to take on a family member’s medical emergency or health issue; 27% of retirees expressed the same.
• More pre-retirees have adjusted their savings strategies due to inflation, especially for individuals who earn less than $100,000 a year.

Plan now for caregiving expenses during retirement

1) If you are financially able to do so, build up a savings cushion in a liquid account in addition to funding your IRA or workplace retirement plan. Putting aside one to three years’ worth of living expenses in an accessible account will provide an important buffer to help prevent retirement account drainage
2) Create a sustainable budget and develop a retirement roadmap with your trusted advisor that protects your assets as much as possible. Factor caregiving costs into your financial plan along with your own healthcare, housing, and other essential expenses.
3) Explore long-term care options and the associated expenses for yourself and your loved ones.
4) Take advantage of catchup contributions to your retirement plan if you qualify (based on age).
5) Many financial experts recommend contributing 10-20% of your salary for retirement. If you have a self-directed IRA, continue to diversify your portfolio with alternative assets whose performance is not correlated with the (volatile) stock market.

Legislation to ease the caregiving financial burden

Nearly 25% of all adults and more than half of people in their 40s support at least one child and at least one parent over age 65. Plus:

• By 2030, all baby boomers will be 65 or older (20% of the U.S. population).
• The U.S. Census Bureau projects that by 2034, there will be more people over age 65 than under 18—the first time ever.

The greying of America will likely bring an increase in family caregiving. Rep. Josh Gottheimer (D-NJ) and Rep. Mike Lawler (R-NY) are cosponsoring a bipartisan Caregiver Financial Relief Act that aims to ease the financial burden by waiving early withdrawal penalties from retirement accounts for family caregiving expenses. There are other bipartisan bills working their way through Congress.

• Credit for Caring Act – allows working family caregivers to turn up to 30% of their family caregiving expenses into a tax credit (up to $5000 a year).
• Improving Retirement Security for Family Caregivers Act – permits family caregivers to contribute up to $7,000 annually to a Roth IRA, regardless of income level and even if not working full time.
• Lowering Costs for Caregivers Act – allows funds in flexible spending, health savings, and medical savings accounts to be used toward a loved one’s medical expenses.
• Catching Up Family Caregivers Act of 2024 – allows qualified family caregivers to make catch-up contributions to a retirement account for up to five years.
• Expanding Access to Retirement Savings for Caregivers Act – allows workers who left the workforce to provide dependent care services to make catch-up contributions to their retirement accounts before reaching age 50.

Shore up retirement savings with a self-directed IRA

We all want our retirement years to be ones of ease and enjoyment—without dealing with the financial cost of family caregiving. You can optimize your retirement savings by including alternative assets in a self-directed IRA (SDIRA).

Rather than rely on unpredictable stock market performance (and deal with that roller coaster), the alternative assets allowed in a SDIRA are generally longer term, illiquid investments that build portfolio diversity and a hedge against stock market volatility. If you already know and understand these nontraditional investments (such as real estate, precious metals, private equity funding, commodities, and many more), consider bolstering your financial future by opening a new SDIRA.

Need more information? Contact us today.