The so-called Secure Act was passed by Congress last week, bringing a mixed bag of changes impacting IRAs and IRA trusts. Our view is that many of our clients won’t consider the Act to be a wonderful gift, but rather a punishment by the legislative Grinches to spoil carefully planned IRA trusts to encourage beneficiaries to save and to protect beneficiaries from unfortunate marriages and/or spending habits. Now, any beneficiaries other than spouses will be limited to ten years to stretch payouts of inherited IRAs, along with other unpleasant surprises. So who benefitted from the changes? Tax collectors and attorneys who will now need to explain why carefully crafted IRA trusts will no longer be effective for those who die after January 1, 2020, to accomplish specific goals for children and grandchildren. If this describes you, you need to make changes to your estate plan as soon as possible to avoid consequences that were previously avoidable. I doubt many of my clients will be writing thank you notes to their Congressional Santas this year. I know I won’t, despite the additional work our elected officials created for me. Harrumph.
If you haven’t yet spoken with your estate planner about revisions to your conduit trusts, make an appointment as soon as the holidays have passed to revise your estate plan.
Oh, and for those of us who were looking forward to age 71.5 to begin collecting RMDs, join me in waiting to reach 72 before RMDs commence due to the new regulations.
The one bright star in the constellation of IRA changes? We now may work longer and add additional earned income to our IRAs beyond the previous age limits. Some will be happy about this. Others are still pondering why these changes were implemented so quietly and made to take effect so quickly. Coal in your stocking or nuts and apples? You decide.
Happy Holidays to All, from your Levy & Associates Team – Where Knowing the Difference Makes the Difference
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