Why do I need to look at the Beneficiary Designation I have at my work or in my trust?

How the SECURE Act Affects your Trust and your Beneficiary Designation(s) 

(SECURE Act means "Setting Every Community Up for Retirement Enhancement")

Let's  look at the developments that will affect trusts and Investment Retirement Accounts, including 401ks, in the field of estate planning. 

Review Your Estate Plan Including Wills, Trusts and Beneficiary Designations 

What does the Act have to do with my Trust? 

Certain types of trusts, when used optimally, might provide families with opportunities to spread taxes from an inherited IRA, retirement account or 401k among multiple generations, including children, grandchildren and great grandchildren.  You can revise your Trust Agreement and your Beneficiary Designations to combat the new provisions. 

What does the Act have to do with my Beneficiary Designations?

The SECURE Act modifies the required minimum distribution (RMD) rules for inherited retirement accounts.  If you have an IRA, you know that you have listed a primary beneficiary and a secondary beneficiary.  It is important for you to understand that your beneficiaries will now, on passage of the Act, pay taxes much sooner on the distributions they inherit.  

The death of the stretch provisions happened under the SECURE Act.  Previously, beneficiaries could "stretch out" distributions over their lifetimes.  Now--they can't.  Now, the IRA or retirement account that you inherit, or your beneficiaries inherit, will have to be distributed and taxed within 10 years of the original owner's death.  This is problematic for taxes if you already have income from working or other sources.  

Exceptions to the Act 

There are exceptions to the Act for some individuals, there are enhancements for retirement plan owners and there are changes to the Required Minimum Distribution age, among other changes. 

The Take Away:

Owners of IRAs, 401ks and retirement accounts should be proactive about estate planning because of the new provisions under the Act.  Let's review your Trust Agreement and Beneficiary Designations.   In the Estate Planning Series, Part 8, there is an explanation of the Act and planning. 

I offer a free telephone consultation (307.200.1914) or videoconference.