Women’s History Month: A Look at Women and Their Financial & Investing History

Ever since the women’s liberation movement of the 1960s and 1970s a lot has changed for women in America, thanks to spitfire pioneers who generated shifts in societal attitudes and pushed for legislative changes.

The National Organization of Women advocated for six measures to ensure women’s equality: enforcement of laws banning employment discrimination, maternity leave rights, childcare centers (so mothers could work), tax deductions for childcare expenses, equal and unsegregated education, and equal job-training opportunities for women in poverty. These all took many years to pass.

Eventually, as more women entered the workforce employers were barred from firing a woman because she was pregnant. More women began running for political office. No-fault divorce laws arose. Women began serving in combat, became astronauts, and sat on the Supreme Court bench. Moreover, they could finally apply for a credit card or loan in their own names.

Women in financial history

Women have been making their mark on the financial sector since our country’s early days. In fact, future First Lady Abigail Adams began trading in government-issued bonds during the Revolutionary War with strong results, and a woman named Victoria Woodhull opened her own brokerage house in 1870 with her sister; she also ran her own newspaper company and was the first woman to run for U.S. President.

Some more notable firsts in modern times:

• Isabel Benham was the first woman to work on Wall Street in the 1930s at R.W. Presspich & Co. and in the 1960s, became the firm’s first female partner.
• Muriel Siebert was the first woman to purchase a seat on the New York Stock Exchange in 1967 and the first woman to be appointed Superintendent of Banking a decade later.
• In 2014, Janet Yellen became the first woman to chair the Federal Reserve.

Women and investing

The women’s liberation movement notwithstanding, it’s been an uphill climb for women to take their rightful places in the workplace and take their seats at corporate tables. As of January 1, 2020, there have been 82 individual women in Fortune 500 CEO roles in total, with three serving as CEO twice.

However, more women are undergoing a new women’s liberation movement when it comes to their investment choices . . . and discovering they can take more control of their financial futures through self-directed investing.

Self-directed IRAs enable investors to better control their retirement savings by investing in alternative assets they know and understand. Although historically, women have taken a more moderate approach to risk, those who prefer to make their own investment decisions can open a new self-directed retirement plan and include non-publicly traded, alternative assets to build a more diverse retirement portfolio. These investments might include real estate, private equity, private lending, partnerships, precious metals or impact investments.

Self-directed investors also conduct their own research and due diligence about the alternative assets they wish to include in their retirement plans. They may already be investing in these assets outside of their existing retirement accounts. In fact, that’s how our founder and CEO, Jaime Raskulinecz, started Next Generation.

Next Generation’s Women in History

Jaime was a seasoned real estate investor who wanted to include real estate in her IRA; she discovered self-direction as a retirement strategy that would allow her to do so. As a pioneer in her own right, Jaime started a company in 2004 to enable more investors to include nontraditional investments in their retirement plans and Next Generation, a third-party administrator for those plans, was born. Continuing to build on her success, in 2017 she led the formation of its sister firm, Next Generation Trust Company, which now acts as custodian for all of its accounts.

Jaime and her partner Linda Varas, Principal of Next Generation, have always believed in the power of women in the workplace and our team is a testament to that. Jaime and Linda have cultivated a career-building environment for women (and men, too!), as you’ll see on our team page.

We are proud to recognize Jaime’s many professional achievements as we continue to educate more women on the power of self-directed investing. Want to take control of your future, today? Sign up for a complimentary educational session with one of our knowledgeable representatives. Alternatively, you can email us directly at NewAccounts@NextGenerationTrust.com or call 888.857.8058 to get started.

The SECURE Act and Self-Directed Retirement Plans

The SECURE Act, signed into law on December 20, 2019, is comprehensive legislation written to expand retirement savings, simplify existing rules, preserve retirement income, and improve plan administration. SECURE stands for Setting Every Community Up for Retirement Enhancement.

The bill mostly makes significant changes to workplace retirement plans; other provisions affect retirement plans in general, including self-directed IRAs. Here is a look at some of the changes, effective January 1, 2020.

Individuals

For those who own a self-directed Traditional or Roth IRA:

• Increase in RMD age for Traditional IRAs – The required minimum distribution age is now 72. Individuals who turn 70½ in 2020 would not be required to take a minimum distribution until April 1^st of the year in which they turn 72. This only applies to individuals who turn 72 in 2020 or later.
• Contribute to your Traditional IRA longer – Workers age 70½ and older with earned income may now continue contributing to a Traditional IRA—and continue building up retirement savings. This only applies to individuals who are turning 70½ in 2020 and later.
• Tax penalty exemption for birth or adoption of a child – For a qualified birth or adoption, the account holder can withdraw a total of $5,000 as an early distribution without the 10% penalty, when the distribution occurs within one year of the event. Income taxes still apply.
• Graduate student IRA contributions – Certain payments to graduate and postdoctoral students will be treated as earned income for IRA contribution purposes.
• No more stretch IRAs – The lifetime distribution option for certain non-spousal IRA beneficiaries is now eliminated and most non-spouse inheritors who are more than 10 years younger than the deceased IRA owner will be required to take all distributions within 10 years. Exceptions include beneficiaries who, at the time of the account owner’s death, are:
  • Disabled or have certain chronic illnesses
  • Within 10 years of the decedent’s age
  • Minors (10-year payout period begins upon reaching the age of majority)
  • Recipients of certain annuitized payments begun before enactment of the SECURE Act.

Business Owners

For business owners who have a SEP IRA, Solo 401k, or other qualified retirement plan:

• Longer deadline to establish a plan – Now employers may establish a qualified plan as late as their business tax filing deadline, including extensions, rather than the last day of the company’s business year. This extension will not apply to certain plan provisions.
• Increase in small-employer plan startup credit – Up to $5,000 per year, effective for 2020 and later taxable years, for employers with up to 100 employees over a three-year period beginning after December 31, 2019. The credit applies to SEP, SIMPLE, 401(k), and profit-sharing plans.
• Automatic enrollment credit – Employers that include an automatic enrollment feature in their new or existing small 401(k) plans or SIMPLE IRA plans will get a maximum annual tax credit of $500 for each of the first three years that the plan is maintained. (Effective for 2020 and later taxable years.)
• Participation by part-time employees – Employees who work at least 500 hours over three consecutive 12-month periods (and who satisfy the plan’s minimum age requirement) must be offered participation in the employer’s 401(k) plan.

All SECURE provisions have tax consequences for individuals and plan sponsors. As always, the team at Next Generation strongly recommends you consult your trusted advisor regarding how the SECURE Act provisions may affect your specific tax situation.

Secure a more diverse retirement portfolio through self-direction

In light of the recent changes, consider including alternative assets within a self-directed retirement plan. Those who are comfortable making their own investment decisions and who understand certain nontraditional investments can build up their retirement savings—and hedge against stock market volatility—with such assets as real estate, precious metals, private equity, hedge funds, private notes, and more.

At Next Generation, we’re here to answer your questions about self-direction as a retirement wealth-building strategy, or how certain provisions of SECURE may affect your self-directed retirement plan. You can arrange a complimentary educational session with one of our representatives, or contact us directly at 888.857.8058 or NewAccounts@NextGenerationTrust.com for more information.