Secure Act- As the Dust Settles

The SECURE Act was passed in late December, so the first few weeks of the year brought significant discussion about what it means, what it accomplishes, and how it effects estate and financial plans.  Fleming and Curti, PLC, in Tuscon, Arizona assembled the "most interesting articles, blog posts, and musings" regarding the Secure Act.  Among them was, of course, Attorney Robert B. Fleming's highlights,  but noted that many others were "giving similar overviews."  

Here are just a few:

• National Law Review;
• K&L Gates, global law firm;
• Kiplinger;
• Kitces’s blog, "(with a nifty summary chart)," and;
• Investment News magazine..

Natalie Choate, the universally recognized guru of estate planning and retirement plans provides a "deep dive" in the form of a 35-page analysis.

Fleming and Curti noted: 

"[a]s the days passed, more reading ensued. Nuances of the Act, some good and some not so good, were dissected and discussed. Because this is still new, expect this to continue in the months (and probably years) ahead." 

Among the interesting reads on specific Act-related topics:

• How law affects special needs trusts, including fixing the “kiddie tax” treatment for minor beneficiaries.
• One possibly unintended consequence: the Act limits the amount of Qualified Charitable Distributions (“QCDs”) the holder of a traditional IRA can make.
• Tucson attorney Brent Nelson explained that, if you really dissect the options, naming a trust as an IRA beneficiary became even more complicated.

In addition, to deal with the much-discussed loss of the “stretch” for inherited IRAs, different strategies are emerging:

• Consider the likely tax situation of the potential beneficiaries and adjust designated beneficiaries accordingly.
• If you have charitable intent, consider a charitable remainder trust.
• Think about converting to a Roth: Is it right for you?; how a conversion works with an IRA trust; and some traps to avoid.

Of course, there is a lot more out there. If you are interested in ongoing analysis, there’s The Slott Report, with almost daily posts on IRA news. Don’t believe everything you read, though. Especially right after a new law arrives, be mindful that 1) it takes a while for the dust to settle, 2) regulations, certain to come along, should clarify some things, and 3) every person’s situation is different. Plan to talk with your financial advisor and estate planning attorney.

This blog will post a separate article in a few days outlining how our office is revising trusts, and IRA beneficiary strategies as a result of the Secure Act.  The most obvious impact, of course, is the loss of the "stretch" IRA for the generation of an IRA owner's grandchildren.  IRA trusts still have utility, but the financial benefits are obviously less compelling.   There is not, however, an utter loss of the tax deferral for children or spouses, however, despite misinformation to the contrary.  The ten-year pay-out rule is not always the result, for good or ill.  Stay tuned!