YOUR ESTATE PLANNING JUST GOT A LITTLE MORE COMPLICATED

The Secure Act: What you need to know.

As a CRNA, you’ve invested in education and training to build a rewarding career and a comfortable life. And part of that plan includes building a nest egg for retirement, and perhaps, something extra to pass on to your loved ones.

Smart retirement planning includes thoughtful estate planning. You want to ensure that your loved ones are taken care of, even after you’re gone. Establishing a comprehensive estate plan can be an involved and sometimes daunting process. This planning requires more than just naming your beneficiaries, especially if you want to pass on substantial assets.

Estate planning has become all the more complicated with the Secure Act — a new law passed by congress that places significant limitations on a commonly used benefit in traditional estate planning.

HERE’S THE BREAKDOWN:

How IRAs Use to Be Passed Down

Before the Secure Act, individuals could pass on the remainder of their Individual Retirement Savings (IRAs) to beneficiaries who may not be of retirement age – like your children or grandchildren. Before the Secure Act, the liquidation of these retirement assets to recipients could happen over the course of their lifetime(s).

Because a beneficiary was usually younger, the tax benefit of the IRA would last much longer as well. Under old regulations, you could shield inherited assets from capital gains and income tax for a much more extended period. As a result, they were protected within an estate and had the potential to grow.

IRA Inheritance After the Secure Act

At the end of last year, the US legislature enacted a series of reforms related to retirement, which included new regulations on how IRAs could be inherited and subsequently used by beneficiaries.

You can review the act here, but the gist of the new law limits the ability to stretch out inherited IRAs. According to the new law, non-spouse IRA beneficiaries must withdraw these assets over a maximum duration of ten years, meaning that recipients will pay taxes on inherited IRAs much faster than before.

It’s important to remember that this new law only applies to non-spouse beneficiaries. Like always, your husband or wife will still be able to stretch IRAs over the course of their lifetime. The concern here is what to do with assets passed on to your children, grandchildren, or other loved ones.

SO, WHAT CAN YOU DO?

While this places significant limitations on your estate planning strategy, some tactics may be able to compensate for these new requirements. Roth IRAs will be less affected. With these assets, taxes are paid before deposit and should be tax-free when used.

Given the new laws, Roth IRAs and other lesser-used retirement savings may provide creative solutions to protect your financial legacy better. To learn more about these options, contact CRNA Retirement and Financial Planning.

Together, we’ll create a strategy to protect your estate and take care of the ones you love, even after you’re gone. Create a plan to pass on your wealth and preserve your legacy with the help of a trusted advisor.

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