Permalink Submitted by Alan - IRA critic on Thu, 2020-01-30 22:43
When client passes, his daughter will be subject to the 10 year rule unless she is disabled, chronically ill, or if client’s plan is a govt or collectively bargained plan and he passes before the Secure Act applies to those plans. That will generally be on 1/1/2022.
Permalink Submitted by Geoffrey Kasher on Thu, 2020-01-30 23:16
OK, I thought so on that part. Thanks. Second part Client bought structured settlements in this IRA. Two items to note These were bought at a discount through an agent.They pay monthly but mature at some point and he gets a lump sum. 2 of these have income that continues to pay until 2040 or later. They also mature at that point as well. assume he dies tomorrow. since the 10-year rule affects the daughter. what happens to the stream of income and payout that go on for an additional 10 years Thanks
Permalink Submitted by Alan - IRA critic on Fri, 2020-01-31 02:02
Depending on how the annuities are structured, it’s possible that they will meet the definition of a “qualified annuity” started prior to Secure and be exempt from the Secure Act’s 10 year rule upon the death of the IRA owner. If not, the inherited IRA would eventually have to distribute the contracts out of the IRA, which I assume is a self directed IRA and also currently subject to RMDs which can be aggregated with the RMDs of any other IRAs owned by the client. Typically, IRA annuities must meet several complex IRS requirements to comply with the RMD regulations and annuity distributions from these contracts are deemed to meet the RMD requirement.
Permalink Submitted by Alan - IRA critic on Fri, 2020-01-31 03:30
Possibly the Life Insurance companies who sold the annuities. The Secure Act contains a detaile definition of a qualified annuity and these life companies should have an opinion whether these annuities are included. The IRS may also be issuing more Regs and guidance on this subject.
Permalink Submitted by Alan - IRA critic on Thu, 2020-01-30 22:43
When client passes, his daughter will be subject to the 10 year rule unless she is disabled, chronically ill, or if client’s plan is a govt or collectively bargained plan and he passes before the Secure Act applies to those plans. That will generally be on 1/1/2022.
Permalink Submitted by Geoffrey Kasher on Thu, 2020-01-30 23:16
OK, I thought so on that part. Thanks. Second part Client bought structured settlements in this IRA. Two items to note These were bought at a discount through an agent.They pay monthly but mature at some point and he gets a lump sum. 2 of these have income that continues to pay until 2040 or later. They also mature at that point as well. assume he dies tomorrow. since the 10-year rule affects the daughter. what happens to the stream of income and payout that go on for an additional 10 years Thanks
Permalink Submitted by Alan - IRA critic on Fri, 2020-01-31 02:02
Depending on how the annuities are structured, it’s possible that they will meet the definition of a “qualified annuity” started prior to Secure and be exempt from the Secure Act’s 10 year rule upon the death of the IRA owner. If not, the inherited IRA would eventually have to distribute the contracts out of the IRA, which I assume is a self directed IRA and also currently subject to RMDs which can be aggregated with the RMDs of any other IRAs owned by the client. Typically, IRA annuities must meet several complex IRS requirements to comply with the RMD regulations and annuity distributions from these contracts are deemed to meet the RMD requirement.
Permalink Submitted by Geoffrey Kasher on Fri, 2020-01-31 02:44
Any suggestions as to where I might find more information?
Permalink Submitted by Alan - IRA critic on Fri, 2020-01-31 03:30
Possibly the Life Insurance companies who sold the annuities. The Secure Act contains a detaile definition of a qualified annuity and these life companies should have an opinion whether these annuities are included. The IRS may also be issuing more Regs and guidance on this subject.