December 1, 2021

Volume XI, Number 335

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Retirement Planning SECURED? Action Steps for Plan Participants and IRA Owners

Passed by Congress in late 2019, the SECURE Act (Act) contained the most significant changes to qualified retirement plans (QRPs) and IRAs since the Pension Protection Act of 2006. 

Notably, the Act eliminated the ability of most non-spouse QRP and IRA beneficiaries to receive distributions over the beneficiary's remaining life expectancy.  Despite the Act's impact on retirement and estate plans, Congress's pandemic-related legislation last year largely overshadowed the Act and may have pushed aside critical estate planning action items for QRP participants and IRA owners.  Although forthcoming Treasury Regulations relating to the Act are expected to clarify several issues raised by commenters, there are still steps QRP participants and IRA owners must take today when considering the potential impact of the Act on their estate plans.

QRP participants and IRA owners should:

  • Review ALL existing primary and contingent beneficiary designations for QRPs and IRAs.

  • Review ANY trust (or subtrust) named as primary or contingent beneficiary, including:

    • any trust for minor children intended to take effect after the death(s) of one or both parents;

    • any trust for a spouse (e.g., a QTIP marital trust);

    • any trust for non-disabled adult children and/or grandchildren; and

    • any special or supplemental needs trust for a physically or mentally impaired beneficiary.

Any trust with retirement plan / IRA provisions, including "conduit trust" or "accumulation trust" provisions (*look for reference to Internal Revenue Code Section 401(a)(9)), and signed before 2020, must be reviewed in the wake of the Act.  Furthermore, any special or supplemental needs trust must be reviewed in light of the Act's definitions of (i) "disabled" and "chronically ill" individuals, and (ii) "applicable multi-beneficiary trust."

The application of outdated trust provisions after the death of a QRP participant or IRA owner could result in adverse income tax and/or creditor protection consequences for the beneficiaries.  Taking action now to review and possibly update an estate plan will SECURE what now may be insecure (and later expensive) if left unattended.

© 2021 Ward and Smith, P.A.. All Rights Reserved.National Law Review, Volume XI, Number 50
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About this Author

John R. Cella, Jr., Ward Smith, minors trusts lawyer, irrevocable life insurance trusts attorney

John counsels clients in estate and business planning matters. He prepares estate planning documents, including wills, revocable trusts, minors trusts, irrevocable life insurance trusts, and charitable trusts, and advises clients on the income, estate, gift, and generation-skipping transfer tax consequences of wealth transfers to individuals, trusts, and charitable organizations. John also works with executors and trustees in estate and trust administration matters. With respect to business planning, he assists clients in entity selection, limited liability company...

919-277-9125
Thomas Zamadics Estate Attorney Ward and Smith
Trusts and Estates Attorney

Tom works closely with individuals, families, and closely-held business owners to provide personalized plans to help identify and achieve their unique estate planning goals. His practice focuses on estate planning and estate and trust administration. He assists clients in the preparation of a wide range of estate planning documents, including wills, trusts, and powers of attorney.

Tom studied at Virginia Tech, where he graduated summa cum laude with a double major in International Studies and Economics. He continued his education at the University of North Carolina School...

919.277.9146
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