January 2001 Newsletter

New and Helpful Legislation

Required Minimum Distributions Change

On January 11, 2001, the IRS issued new proposed regulations covering required minimum distributions from IRAs and other qualified plans. These new regulations are dramatically different from the current rules, which have been in effect since 1987. And, for a very nice change, they actually are easier to understand and use — and in most cases will be helpful to clients.

Those of you older than 70-1/2 who are taking required withdrawals from IRAs can choose to use these new rules to calculate your distribution for 2001, or choose to use the old rules. The new rules will be the only choice after January 1, 2002.

The new rules impact planning in three major ways:

  1. It will be simpler to calculate lifetime required distributions, because almost all individuals will use one table to make the calculation. Indeed, the regulations say it will be so simple that they expect qualified plan custodians to make the calculation for their customers each year. The amount of the distribution will not change even if an individual changes their beneficiary.
  2. If you inherit benefits after the death of a participant because you are the named beneficiary on the account, you can "stretch out" distributions from the IRA over your life expectancy. You no longer have to be the named beneficiary as of the date the plan owner started taking withdrawals (age 70-1/2 or "required beginning date"); the beneficiary is not finalized until the end of the year following the year of death. Thus, an account owner during his or her lifetime can change the beneficiary of the IRA without dramatic consequences like before.
  3. The pressure to select the "best method" for calculating distributions after age 70-1/2 is gone, and so are all the different methods. Under the new rules, all participants and spouses get the benefit of distributions stretched over their entire lifetime (the table goes until age 115). The undesirable result of having the entire account balance paid out in the year following the death of the second spouse (where the joint lives, recalculated method was being used) will be gone, as long as there is a contingent beneficiary (a named individual, not just the estate).

As with any major rule change, it will take time to digest the full impact and application, and develop new strategies for our clients. We will be reviewing all clients who are in payment status and make recommendations as to whether to use the new rules for their 2001 required distribution.

Oregon Adopts Sec. 529 Education Savings Plan

The other major piece of legislation that will be helpful to our clients is the Section 529 tax-deferred educational savings plan. Steve Hewitt has written an extensive article on this topic, which can be viewed by clicking here.

Investment Seminars

Silver Oak's "Investment Boot Camp" will be presented bi-monthly in 2001. The program combines pieces from our former three-part series into one presentation by Deborah Thomas, Steve Hewitt and Peter Samson.

Please call or e-mail Betsy to register, as space is limited. Or if you like, we can send a copy of the schedule to someone you think would be interested in the program.

Monday, February 19, 11:30 am-1:30 pm
Saturday, April 28, 9:30 am-11:30 am
Wednesday, June 6, 3:30 pm-5:30 pm

Year End Closing

Silver Oak initiated a new policy last year, and closed the office for the week between Christmas and New Year's. We would like to make this an annual event for employees, if we find it is not problematic for our clients.

New Voice at Silver Oak

We are pleased to welcome Mary Barr to the Silver Oak family. Mary will be working part-time at the front desk as receptionist and all-around administrative assistant. She moved to Portland in 1996 from Denver to help care for her niece, Amy, who is now 5. Prior to joining Silver Oak, Mary worked in banking and telecommunications.

Client Referrals

As mentioned in the September newsletter, our policy is to limit the number of ongoing clients for each planner, in order to provide the best possible level of service to those clients. After fifteen years of practice, I have reached that point and will not be taking any new clients for the foreseeable future.

Fortunately, Steve Hewitt and Peter Samson are both still open to new clients, so we will not be "closing the doors" at Silver Oak. Since we work as a team on all clients of the firm, I will still be involved in strategy, consultation and review of all Silver Oak work. We will be scheduling meetings with you to introduce Peter and Steve, if you have not yet met them.

We appreciate your referrals and ask that you make them in the future to the firm rather than to me personally. Betsy Blank will be in charge of getting a new client to the planner who is most appropriate for the project.

I will notify you when any openings occur in my client list, and we will keep a waiting list for that possibility. My thanks to all of you who have helped my practice grow. I love financial advisory work and plan to keep doing it for many years to come!

Deborah Thomas

from 4 to 7 pm

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