What market turmoil and banking crisis could mean for your retirement savings

Aaron Ulrich, Family Wealth Strategies Financial Adviser, joins Yahoo Finance Live to discuss what retirees need to know when filing taxes for this year, despite the market turmoil and present banking crisis.

Video transcript

- All right, T minus 25 days until tax day. And there are meaningful changes to keep in mind before retirees finish filing. Time now to talk about getting retirement ready with Aaron Ulrich, Family Wealth Strategies financial Advisor. Good to see you, sir. This segment brought to you by E-Trade. What should retirees keep in mind this year before filing?

AARON ULRICH: Well, before filing, we're talking to people about the changes that are coming down the pike. So the SECURE Act 2.0 passed late last year. It was a part of a bigger bill. And there's some parts of that that go into effect for when they file this year. There are other parts that go into effect before tax year 2023, so not going to go into effect until they file in 2024. And so it's creating a lot of confusion.

So we're working through it with them on what they need to know, what they can forget from old rules, and helping them understand that kind of the new normal is changing tax code. It's here. I think it's going to continue through our retirees, through their retirement. I think you're going to see the political influence on the changing tax code. And that's affecting a lot of our clients.

- Well, when it comes to what people need to know, retirees need to know when they're filing this year, you mentioned SECURE Act 2.0. Some of those changes go into effect this year. What are they? And what should people be doing about it?

AARON ULRICH: Yeah, so the big stuff there is that the retirement-- the required minimum distribution age has been raised, OK? So forever that was 70 and 1/2, which was confusing. I don't know that the IRS decided that half was a good idea, but so that changed. And so it's now-- they had raised it to 72. And then beginning this year, that went to 73. So that's the big one that came through on that.

It's-- additionally, the penalty. So if you mess up your required minimum distributions, so you have to take a little percentage out of that bucket, if you mess that up, in the past, it was very punitive, a 50% penalty if you made a mistake with that. Well, they've done the right thing, in my opinion, and they've backed off that penalty. So they've reduced it. I think in a lot of cases, it might be even 25. And they've even expanded the ways that you can kind of get a get out of jail free card. And if you fix the mistake quickly, they're not going to enforce that penalty. So some positive changes there.

- Aaron, I would imagine you have clients every day for the last couple of weeks calling you and saying, what is going on with the banks? What does this mean for my retirement? What do you tell them?

AARON ULRICH: Yeah, and we do. And there have been people calling. We get emails, what's going on with the banks? The first step that I want to take with folks is let's take a reset here and figure out what is the real risk to you, OK? And so we want to use that as an opportunity to understand, what is the FDIC limits? How does that work? Is it the same for a single account as it is for a jointly held account? Do those FDIC insurance limits automatically double?

Additionally, we want to take a look at their overall portfolio and start understanding where they're at, the risk you're taking of being in a smaller regional bank, it's just not the same here in Louisville, Kentucky as it might be for Silicon Valley Bank, and help them understand what the regulations are, why it's important to think about those things, bank regulations. I mean, talk about an exciting topic, right? So we want to help them understand how those regulations came to be so they can maybe make a better informed decision on who to vote for possibly, if that's an important thing to them.

But mostly, we're trying to help them understand that yeah, your money's safe. I'm not going down to my bank to pull any money out. I don't think you should either. But you should absolutely understand what happened and what are the risks involved with your bank.

- Very, very important time for everyone to understand what's going on. Aaron Ulrich, great stuff. Thank you.