Estate Planning Tips for Wealthy Retirees After the SECURE Act
The Setting Every Community Up for Retirement Enhancement (SECURE) Act, recently signed into law by President Trump, has some wide-reaching impacts, particularly in the realms of retirement and estate planning. The main effects of the law are that it modified required minimum distribution rules for retirement plans, expanded retirement plan access and increased lifetime income options in retirement plans.
Here are a few strategies you may wish to employ with your retirement and estate planning in the wake of the bill’s implementation.
- Splitting IRA beneficiaries: Non-spouse IRA beneficiaries of people who die after January 1, 2020 are no longer able to stretch distributions out over their lifetime. Now, the whole amount must be distributed within 10 years of the year following the year of death. For a $1 million inheritance, that’s $100,000 a year.
- Roth IRA conversions: Tax valleys now extend to age 72 instead of age 70 ½. Through Roth conversions, you’ll have the opportunity to move money from a pre-tax position to a post-tax position and recognize that income in a tax-valley year. There, the money can grow tax-deferred, and your qualified distributions will be tax-free.
- Consider the use of charitable remainder trusts: Charitable remainder trusts are useful for people who want to donate a lot of money, but also wish to generate income with the trust while alive. Typically this involves donating appreciated investments, which allows you to avoid capital gains taxes while also giving you a tax deduction and creating income. The remainder of the money is given to charities of your choosing upon your death. Under the SECURE Act, it’s expected more people will name CRTs as IRA beneficiaries.
For more information about retirement and estate planning strategies after the passage of the SECURE Act, contact an experienced Tampa estate planning lawyer at BaumannKangas Estate Law.