IRA Ins and Outs under CARES and SECURE

by | Dec 2, 2020 | estate and tax planning, estate planning in Indiana, IRAs in estate planning, philanthropy

While IRA accounts are hardly new, it’s that time of year when financial advisors check in with clients to assess beneficiary designations and other planning details, Jacqueline Sargeant points out in Financial Advisor Magazine, reminding readers that two relatively recent pieces of legislation have affected Individual Retirement Accounts.

IRA “OUTS”:

  • The CARES (Coronavirus Aid, Relief and Economic Security) Act, which went into effect in December, 2019, allowed individuals to skip their Required Minimum Distributions for 2020, with required distributions back in effect beginning January 2021.
  • The SECURE (Setting Every Community Up for Retirement Enhancement) Act, which went into effect early this year, also affects IRAs. In fact, starting this year, SECURE pushes back the required start of RMDs from age 701/2 to 72. (It’s worth noting that those who turned 701/2 in 2019 had to take their first RMD by April 15 of this year.)

IRA “INS”:

As per SECURE, there will be no age limits for traditional IRA contributions. Seniors who continue to work will now be allowed to continue putting away money on a tax-deferred basis.

The 2021 combined annual contribution limit for IRAs is the same as it has been this year: $6,000 for those under 50, $7,000 for those 50 and up. (Roth contribution limits are reduced or eliminated at higher income levels.)

At Geyer Law, because retirement and estate planning are so intertwined, we often discuss with clients the different options when setting up their IRA in coordination with their overall estate planning goals. “Ins” and “outs” to be considered include:

Trusteed IRAs (you specify contingent beneficiaries that cannot be changed by the primary beneficiary).
Charitable Rollovers allow individuals to make direct transfers of up to $100,000 per year to qualified charities

While Individual Retirement Accounts themselves are hardly new, it’s worth exploring how both the old and new “ins” and “outs” can help you realize your estate planning goals.

– by Cara M. Chittenden, Attorney with Rebecca W. Geyer & Associates