Instead of accepting the new 10 year RMD rule for non-designated IRA beneficiaries, let’s work to get the rules for passing retirement accounts to heirs simpler and more consistent.
An easy but fair change could be to continue using the original owner’s RMD table for beneficiaries to simplify withdrawal rules on all retirement accounts. RMD withdrawals can continue on the original owner’s schedule regardless of how many times ownership changes. Recordkeeping would be easier. Planning would be easier. Taxes might be paid more gradually but that may occur with our increasing longevity anyhow. Favoritism for certain heirs would be gone, too. This simplification will reduce stress for IRA custodians, investment advisors and heirs.
It is inconsistent to encourage all workers to contribute to retirement accounts throughout their careers without also planning carefully for how these assets pass to their heirs. They should pass equitably to all heirs without favoritism.
As an actuary, your research on this issue could be helpful to our elected officials to revise this part of the SECURE Act. The nightmare of problems with the current legislation is just beginning!!!
Instead of accepting the new 10 year RMD rule for non-designated IRA beneficiaries, let’s work to get the rules for passing retirement accounts to heirs simpler and more consistent.
An easy but fair change could be to continue using the original owner’s RMD table for beneficiaries to simplify withdrawal rules on all retirement accounts. RMD withdrawals can continue on the original owner’s schedule regardless of how many times ownership changes. Recordkeeping would be easier. Planning would be easier. Taxes might be paid more gradually but that may occur with our increasing longevity anyhow. Favoritism for certain heirs would be gone, too. This simplification will reduce stress for IRA custodians, investment advisors and heirs.
It is inconsistent to encourage all workers to contribute to retirement accounts throughout their careers without also planning carefully for how these assets pass to their heirs. They should pass equitably to all heirs without favoritism.
As an actuary, your research on this issue could be helpful to our elected officials to revise this part of the SECURE Act. The nightmare of problems with the current legislation is just beginning!!!