On February 12, we started our first Women of Wisdom (WOW) event of the year on the topic of taxes. Our Women of Wisdom spent the afternoon with Eddy Cheung, CPA, as he discussed new tax laws, the efficient use of various investment accounts, and the importance of helping the next generation through gift and inheritance. Eddy has been a CPA for over 20 years, beginning his career at PricewaterhouseCoopers where he worked very closely with Fortune 500 companies. He started his own CPA firm, Legend Tax, in 2004 with a focus on maximizing clients’ tax benefits by creating a tailor-fit solution for their unique situations. Eddy goes above and beyond to establish long-term relationships with his clients by providing efficient and organized tax preparation, business structuring, and audit defense.
Eddy began the presentation by reviewing The SECURE Act and how it is a game changer, not only in the financial services industry, but for our clients as well. He explained the fundamentals of this new law: the required minimum distribution (RMD) age for traditional IRAs has increased to 72 from 70.5, a shift to the 10-Year Rule for inherited IRAs, and the ability to contribute to your IRA at any age. 529 College Savings Plans now have the flexibility to contribute up to $10,000 towards student loans. 401(k)s will allow a $5,000 penalty-free withdrawal to go towards childbirth or adoption. The SECURE Act also created a new tax credit for small business’ 401(k) plans. This tax credit can range from $500 – $5,000 for up to 3 years.
With the SECURE Act in mind, Eddy discussed the benefits of efficiently using wealth for education, retirement, and estate planning. Using IRAs as an example, Eddy explained the concept and efficiency of a Backdoor Roth Conversion for those who have exceeded the income limits to contribute to a Roth IRA. This “have your cake and eat it too” practice allows people to immediately convert contributed funds from a Traditional IRA to a Roth IRA resulting in no penalties, no RMD, and tax-free money after conversion.