What worked in the past as a benefit of passing down an IRA might no longer apply, but if it’s been some time since you thought about your IRA gifting strategy, now is a good time to revisit.
Non-spouse Beneficiaries
The SECURE Act has caused problems for many clients with estate plans who have individual retirement accounts inside. This is because many non-spouse beneficiaries are no longer eligible to take advantage of stretch IRAs, and are instead responsible for withdrawing inherited retirement funds by the end of the 10th year following the original owner’s death.
A three step action plan and a meeting with an experienced estate planning lawyer can help you to identify some of these important issues and to come up with the right strategy.
3 Step Action Plan to Protect Your Interests
First, determine if your situation will be affected by these RMD rule changes. If you have an IRA that is intended to be gifted to a beneficiary of your estate, who is much younger than you, they are likely to inherit these tax consequences most significantly. The second step is to meet with your estate planning attorney to discuss more about how these tax rules have changed your plan and the potential tax problems that this might cause for your beneficiaries. The third step is to discuss alternative planning solutions directly with your estate planning lawyer.
This can be an important way to identify those situations in which your loved ones could be affected by your intentions to support them. Consulting with a lawyer is crucial for helping to protect your interests in these complex situations.
