Home etftrends.com An Advisor’s Guide to Proposed Retirement Legislation

An Advisor’s Guide to Proposed Retirement Legislation

There have been many recent happenings in Washington D.C. in regards to legislation that will impact retirement income and savings for clients, and Tom Duncan, senior director of the Advanced Consulting Group for Nationwide, gives an overview on the Nationwide blog.

First and foremost was the passage of House Resolution 2954 in the U.S. House of Representatives on March 29. The Securing a Strong Retirement Act of 2022, dubbed SECURE 2.0, now faces reconciliation between the House and Senate versions with expectations of being passed in Q4 of 2022.

The version in the House includes expanding the rules for Qualified Charitable Donations (QCD) from IRAs to allow for an annual donation to a charity up to $100,000 that would be excluded from income for individuals over 70 ½ years. A one-time distribution can also be made to charities via a charitable remainder trust (CRT) as well as a charitable gift annuity up to $50,000 indexed, with a total limit of $100,000.

Required minimum distributions will also be bumped to 73 in 2023 and 74 in 2030 before reaching 75 in 2033 under the proposed House legislation. IRA contributions will be indexed so that the catch-up limit acts the same as the standard IRA contribution limit; current laws increase contributions by $1,000 at 50 but aren’t indexed so that they can increase annually.

Proposed Tax Changes

President Biden announced his proposition for the 2023 federal budget on March 28 and included a host of new proposals for taxes. Most notable was an increase the top income tax to 39.6% from 37%, which would apply to married couples filing jointly with an income greater than $450,000, heads of household with an income above $425,000, single filers with an income more than $400,000, and married taxpayers that file separately and make over $225,000.

The President has also proposed a “billionaire minimum tax” that would be a 20% income tax rate for families with wealth that exceeds $100 million and the top 0.01% of earners.

The Treasury Department is currently taking comments on proposed regulations regarding beneficiary RMD rules under the original SECURE Act from December 2019. These include further defining a designated beneficiary, the limit for liquidating an inherited IRA, as well as defining eligible designated beneficiaries and how they can withdraw from an inherited IRA.

For advisors looking for retirement income options for their clients, Nationwide offers a variety of actively managed ETFs for advisors that cater to a range of investment exposures and strategies within the major indexes, including the Nationwide Nasdaq-100 Risk-Managed Income ETF (NUSI) and the Nationwide S&P 500 Risk-Managed Income ETF (NSPI).

For more news, information, and strategy, visit the Retirement Income Channel.


This article was prepared as part of Nationwide’s paid sponsorship of ETF Trends.

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KEY RISKS: The Nationwide Nasdaq-100® Risk-Managed Income ETF, Nationwide S&P 500® Risk-Managed Income ETF, Nationwide Dow Jones® Risk-Managed Income ETF, and Nationwide Russell 2000® Risk-Managed Income ETF (collectively, the “Risk-Managed Income ETFs”) are subject to the risks of investing in equity securities, including tracking stock (a class of common stock that “tracks” the performance of a unit or division within a larger company). A tracking stock’s value may decline even if the larger company’s stock increases in value. The Risk-Managed Income ETFs are subject to the risks of investing in foreign securities (currency fluctuations, political risks, differences in accounting and limited availability of information, all of which are magnified in emerging markets).

The Risk-Managed Income ETFs may invest in more-aggressive investments such as derivatives (which create investment leverage and illiquidity and are highly volatile). The Risk-Managed Income ETFs employ a collared options strategy (using call and put options is speculative and can lead to losses because of adverse movements in the price or value of the reference asset). The success of the Risk-Managed Income ETFs’ investment strategy may depend on the effectiveness of the subadviser’s quantitative tools for screening securities and on data provided by third parties. The Risk-Managed Income ETFs expect to invest a portion of their assets to replicate the holdings of an index. Correlation between Fund performance and index performance may be affected by Fund expenses and because the Fund may not be invested fully in the securities of the index or may hold securities not included in the index.

The Risk-Managed Income ETFs frequently may buy and sell portfolio securities and other assets to rebalance its exposure to various market sectors. Higher portfolio turnover may result in higher levels of transaction costs paid by the Risk-Managed Income ETFs and greater tax liabilities for shareholders. The Risk-Managed Income ETFs may concentrate on specific sectors or industries, subjecting them to greater volatility than that of other ETFs. The Risk-Managed Income ETFs may hold large positions in a small number of securities, and an increase or decrease in the value of such securities may have a disproportionate impact on the Funds’ value and total return. Although the Risk-Managed Income ETFs intend to invest in a variety of securities and instruments, the Risk-Managed Income ETFs will be considered non-diversified.

Additional risks include: Collared options strategy risk, correlation risk, derivatives risk, foreign investment risk, and industry concentration risk.

The Fund expects to invest a portion of its assets to replicate the holdings of an index. Correlation between Fund performance and index performance may be affected by Fund expenses and because the Fund may not be invested fully in the securities of the index or may hold securities not included in the index. The Fund frequently may buy and sell portfolio securities and other assets to rebalance its exposure to various market sectors. Higher portfolio turnover may result in higher levels of transaction costs paid by the Fund and greater tax liabilities for shareholders. The Fund may concentrate on specific sectors or industries, subjecting it to greater volatility than that of other ETFs. The Fund may hold large positions in a small number of securities, and an increase or decrease in the value of such securities may have a disproportionate impact on the Fund’s value and total return. Although the Fund intends to invest in a variety of securities and instruments, the Fund will be considered nondiversified. Additional Fund risk includes: Collared options strategy risk, correlation risk, derivatives risk, foreign investment risk, and industry concentration risk.

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S&P 500® Index: An unmanaged, market capitalization-weighted index of 500 stocks of leading large-cap U.S. companies in leading industries; gives a broad look at the U.S. equities market and those companies’ stock price performance.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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