Preservation | Family Wealth Protection & Planning

The SECURE 2.0 Act of 2022, signed into law by President Joe Biden on December 29, 2022, makes significant changes to the administration and taxation of retirement plans. It addresses many practical concerns that surfaced after the passage of the original SECURE Act in 2019 and during the pandemic. Some of the key changes are set out below.

This is the fourth in a four-part blog series on the Setting Every Community Up for Retirement Enhancement Act (SECURE Act). The first three installments can be read here.

An area of estate planning that is impacted by the changes in the recently enacted SECURE Act is the use of qualified charitable distributions (“QCDs”). A QCD is a distribution from an IRA (up to $100,000 per year, per individual) made directly to an eligible charity.

Those 70½ and older may continue to make QCDs to public charities. A QCD will count toward an individual’s RMD requirement and generally will not trigger an income tax on distribution. While the age to begin taking RMDs was raised to 72 under the SECURE Act, the age to make QCDs remains unchanged at 70½. Because QCDs are not included in income, they are typically more tax-efficient than taking a charitable deduction.

This is the third in a four-part blog series on the Setting Every Community Up for Retirement Enhancement Act (SECURE Act). Parts 1 and 2 can be read here. The final installment will cover how the SECURE Act affects Qualified Charitable Deductions.

As discussed in previous installments of this blog series, after the death of a retirement plan participant or IRA owner, non-eligible designated beneficiaries of a retirement account (other than a Roth) will experience an acceleration of taxable income and the loss of tax-deferred growth that was available before the recently enacted SECURE Act. This is due to the elimination of the life expectancy, or stretch, payout. If it is important to you to minimize the additional future income tax caused by the 10-year payout, there are several items worth considering.

This is the second in a four-part blog series on the Setting Every Community Up for Retirement Enhancement Act (SECURE Act). Part 1, an overview of the act’s key provisions, can be read here. Future installments will cover minimizing the tax burden of the act’s 10-year payout and how it affects Qualified Charitable Deductions.

This is the first in a four-part blog series on the Setting Every Community Up for Retirement Enhancement Act (SECURE Act). Future installments will cover more details on the impact of the SECURE Act on estate plans, minimizing the tax burden of the act’s 10-year payout, and how it affects Qualified Charitable Deductions.

Retirement accounts are a seemingly simple and effective way to protect assets from future creditors, but the subtle nuances of what is protected under Missouri law and what is protected in bankruptcy can be complex. In the July/August 2019 edition of the Journal of the Missouri Bar, attorneys Keith Herman and Jeffrey Herman analyze how you can use retirement accounts for asset protection and the potential loopholes to avoid.

The IRS announced cost-of-living increases for various retirement-related accounts on Nov.1, 2018. These changes for 2019 include:

• The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $18,500 to $19,000.
• The limit on annual contributions to an IRA is increased from $5,500 to $6,000. The additional “catch-up” contributions limit for individuals age 50 and over remains at $1,000.

Retirement accounts such as IRAs, 401(k) and 403(b) plans and other qualified plans or profit-sharing plan accounts may provide an opportunity for charitable giving by offering a variety of tax benefits, depending upon the structure.

Many people do not realize the importance of correctly designating the beneficiaries of their retirement accounts (IRAs, 401(k) plans, etc.). Because retirement accounts are funded with pretax dollars, there can be significant tax consequences when required minimum distributions are taken, depending on the beneficiary named.