Helping Your Family Feel Secure Possible Changes to IRA Distribution Law
You may not know that Craig is a prolific writer. He not only writes a weekly column for the Island Sun Sanibel, but he’s also on the editorial advisory board for Trusts & Estates magazine, which is a national trade journal. You can read the columns on our website at SBSHLaw.com. Read on for an overview of a recent column on a new tax law that could affect many families. Congress is set to send a bill that would drastically spike middle-class taxes on IRA accounts to the president’s desk for signing. The Setting Every Community Up for Retirement (SECURE) Act would raise the required age for personal IRA distribution from 70 1/2 to 72, but it’s what the bill takes away that could change your family’s future. In exchange for raising the required withdrawal age to 72 and a few other benefits for employers, the law would require non-spouse beneficiaries of “Inherited IRA accounts” to pull out all the money within 10 years of your passing. Your beneficiaries would pay higher taxes because their withdrawals would be larger.
• A $1 million Inherited IRA would require withdrawals of $100,000 annually, pushing the beneficiary up to a higher tax bracket. If the beneficiary lives in a state with state income tax, more than half of that distribution could be lost to taxes. (Florida does not have a state income tax, but many of our clients’ beneficiaries reside in states that do.) • For beneficiaries with college-age children, financial aid applications may be affected. Because the beneficiaries’ income would increase due to higher distributions, aid formulas would require greater parental contributions toward their children’s education. Similarly, Inherited IRAs left to college students could have the same result. As of this writing, the bill has not yet become law although it is expected to do so. For those clients who are in our Client Care Program, watch for your year-end package where we’ll keep you up to date. For those Client Care Program clients who we’ve helped with Retirement Plan Legacy Trusts, we’ll also prepare educational materials and updates advising you as to possible solutions and alternatives once this new law passes.
To put this in perspective, consider these scenarios.
e n B e a n s W i t h
SUDOKU
Ginger and Garlic
Turkey is, for the most part, a healthy and lean protein. Thanksgiving sides, on the other hand, tend to be a little more indulgent. This year, eschew the classic, creamy green bean casserole in favor of this lighter, healthier, and altogether tastier option.
INGREDIENTS:
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2 lbs whole green beans, ends trimmed 6 tbsp extra-virgin olive oil
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1/2 tsp ground ginger 1 tsp crushed red pepper Kosher salt, to taste
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2 garlic cloves, thinly sliced
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1. Bring a large pot of salted water to a boil. To the side of the stove, prepare a large bucket of ice water. 2. Cook beans in boiling water for 4 minutes. Immediately transfer to ice water. Drain and pat dry. 3. In a large skillet, heat oil over medium-high heat. Add garlic and cook until fragrant, 30 seconds. Stir in ground ginger and crushed pepper. Add green beans. 4. Cook together for 2–3 minutes. 5. Transfer to plate and serve.
Solution on Page 4
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