14 IRI-Advocated Provisions Included in SECURE 2.0 Legislation

[Insurance Forums Staff]

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14 IRI-Advocated Provisions Included in SECURE 2.0 Legislation

Congress to vote this week on Omnibus Appropriations Legislation with significant retirement savings reforms

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[somarco]

Reminds me of the most feared words in the English language . . . "I am from the government and I am here to help you".

Authorize the formation of 403(b) pooled employer plans (PEPs).
Enhance the start-up tax credit to encourage small businesses to establish workplace plans.
Increase automatic enrollment contribution rates and enhance automatic plan features.

and . . .
massive $1.7 trillion omnibus appropriations measure

What could possibly go wrong here?

 

[Allen Trent]

I sure hope Secure Act 2.0 corrects the current glaring ommission of the "see through/look through" trust provision for custodians of qualified accounts. prior to 2019 Secure Act, custodians were able to have a trust beneficiary & as long as the custodian could look in the trust & find specified natural persons, they could process claims to those individuals. In the last 2 years, because Secure Act was silent on the see through/look through, custodians are only permitted to pay the claim to the actual trust, most times in a lump sum taxable check & many times taxable at the high trust tax rate. (5 year deferral allowed for the trust if deceased was under age 72 RMD date)

Seen some huge tax bills this year & many of the attorney's that drafted the trust & directed the person to name the trust were surprised this has occurred.

Unless extremely unique situation ( 2nd marriage, special needs, financial problems) likely best to not have a trust on your bene designation for qualified accounts unless absolutely necessary. Spouse as primary, contingent kids, per stirpes can provide the best tax efficiency available & in cases where annuities are holding the accounts, additional claim options available such as payout annuity/spia to receive the funds & spread the tax

 

[scagnt83]

Reminds me of the most feared words in the English language . . . "I am from the government and I am here to help you".

Only if the citizens make it that way... or think it that way.

When you believe the lie and repeat the lie long enough ... the lie is eventually the truth.

Our government is what we make it to be.

 

[scagnt83]

I sure hope Secure Act 2.0 corrects the current glaring ommission of the "see through/look through" trust provision for custodians of qualified accounts. prior to 2019 Secure Act, custodians were able to have a trust beneficiary & as long as the custodian could look in the trust & find specified natural persons, they could process claims to those individuals. In the last 2 years, because Secure Act was silent on the see through/look through, custodians are only permitted to pay the claim to the actual trust, most times in a lump sum taxable check & many times taxable at the high trust tax rate. (5 year deferral allowed for the trust if deceased was under age 72 RMD date)

Seen some huge tax bills this year & many of the attorney's that drafted the trust & directed the person to name the trust were surprised this has occurred.

Unless extremely unique situation ( 2nd marriage, special needs, financial problems) likely best to not have a trust on your bene designation for qualified accounts unless absolutely necessary. Spouse as primary, contingent kids, per stirpes can provide the best tax efficiency available & in cases where annuities are holding the accounts, additional claim options available such as payout annuity/spia to receive the funds & spread the tax

I have known attorneys who would exclude qualified accounts from trusts for this very reason. I had a very interesting discussion with an estate planning attorney once who had a long list of past provisions that were NOT grandfathered in when laws changed.

With the stroke of a pen, the whole plan can go to hell. So unless it was a special needs situation, he often recommended qualified accounts just utilize the bene designation for the natural persons directly.