A "Better" Guide to Estate Plan Funding, Part 9: IRA Beneficiary Designation Rules and Strategies

Exploring general rules, and new guidance, on IRA beneficiary designations

Table of Contents:

1. Intro

2. Video

3. Slides

4. Key Takeaways

Intro

Perhaps the most challenging subject in funding the estate plan is navigating the complex rules governing minimum distributions from traditional IRAs, Roth IRAs, and qualified plans.

These rules were significantly changed by the SECURE Act 1.0 and 2.0, and after nearly 5 years, final Treasury Regulations were just published to clarify some of these changes and traditional rules. While it is impossible to cover this subject comprehensively on the time allotted (I would need 2+ hours), this installment of funding the estate plan covers:

• Spousal beneficiary designation strategies (bookended at the end with bonus QTIP requirements);

• The new rules for mandatory distributions to ordinary run-of-the-mill designated beneficiaries as opposed to eligible designated beneficiaries;

• The new trust look-through rules;

• The new separate share rules; and

• Different approaches to crafting and structuring a beneficiary designation for trusts and subtrusts.

Note that the goal of these materials is not mastery. I am purposefully general in some of the topics and changes presented. So, you should listen to and read these materials with a goal of building a framework to help you better spot issues and identify planning ideas. Then, where appropriate, you can engage in a deeper dive.

Video