By Sarah Brenner, JD
Director of Retirement Education
It has been well over a year since the SECURE Act became a reality, transforming the rules for inherited IRAs and doing away with the stretch IRA for most beneficiaries. While the SECURE Act statute gave us framework for the new rules, there are large gaps that need to be filled in and many unanswered questions remain.
IRA owners and practitioners who work with retirement plans have been struggling with these questions. There are issues with exactly how the new 10-year rule will work, and those issues were made more confusing by contradictory language in the recently released, and then corrected, IRA Publication 590-B. There are also questions about whether separate accounting still matters and how grandfathered and multi-beneficiary IRA trusts will be treated. These are just a few of many areas that need to be clarified.
This is where regulations come in. The regulation process is a long one. First, proposed regulations must be written, then there is a comment period and ultimately final regulations are issued. This can take a while. For the last set of regulations explaining the RMD rules, this process took over a decade.
For those of us wondering what is happening with this process there is a bit of good news. At the recent virtual Federal Bar Association Insurance Tax Seminar, Stephen Tackney of the IRS Office of Associate Chief Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes) confirmed that proposed regulations are on the way and promised they will provide answers to many of the questions the SECURE Act has raised. However, exactly when the regulations will arrive is still unknown. “I always say it’s in the ‘soon’ category; that means later than imminent but before eventually,” Tackney said.
Stay tuned to the Slott Report for the latest updates. We will be monitoring any IRS guidance on the SECURE Act carefully and closely watching the regulation process unfold. Hopefully, there will be more details on exactly how the new rules for inherited IRA work and more answers to our many SECURE Act questions in the near future, possibly even before the end of 2021.