Proposed IRS Regulations Issued for Retirement Accounts
The IRS recently issued proposed regulations addressing required minimum distributions (RMDs) from retirement plans. One surprise deals with beneficiaries subject to the ten-year rule who inherit an IRA after the original owner has reached the age of seventy-two. The proposed regs seem to require that these individuals must take minimum distributions every year throughout the ten-year period, with a final distribution on December 31 of the tenth year. Conventional wisdom was that designated beneficiaries subject to the ten-year rule would be permitted to wait until December 31 of the tenth year following the calendar year of the decedent’s death to take a distribution. In another surprise, some commentators have suggested that in certain circumstances the proposed regulations seem to actually allow distributions to be made using the life expectancy rule instead of the ten-year rule when the beneficiary named by the employee is an accumulation trust established for eligible designated beneficiaries who are not disabled or chronically ill.
Retirement accounts are an increasingly large share of a family’s wealth. Appropriately planning for both the income and estate tax consequences of these accounts is vital. While the SECURE Act eliminated many planning opportunities, some still exist. You should consult with qualified legal and tax advisors to determine the best steps to take with your retirement account.
This post is for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Nothing herein creates an attorney-client relationship between Hallock & Hallock and the reader.