A Safer Retirement and Environment – What We’re Implementing to Help Keep You Safe: READ MORE

Here at Chadmere Capital Inurance and Financial Services, we are adhering to state and local guidelines in order to protect both the health and safety of clients and staff. Keeping our clients and staff safe is our highest priority and we’re taking all appropriate measures to ensure a safe environment. Should you prefer to not meet face-to-face, we are continuing to serve our clients through virtual settings such as Zoom or phone calls.

We look forward to continuing to help individuals and families achieve their ideal retirements.

Chademere Capital Insurance and Financial Services
(803) 242-1050

CLOSE

SECURE 2.0 MODIFIES RULES FOR SPECIAL NEEDS TRUSTS

By Sarah Brenner, JD
IRA Analyst
Follow Us on Twitter: 
@theslottreport
The SECURE Act changed the game for inherited IRAs. For most beneficiaries, the stretch IRA is gone and has been replaced by the 10-year payout rule. However, the SECURE Act carved out some rules for special needs trusts for disabled or chronically ill beneficiaries that allow the stretch to continue for these beneficiaries.

Under the SECURE Act, the ability to use the stretch for chronically ill or disabled beneficiaries is available only to an applicable multi-beneficiary trust (AMBT). The SECURE Act said that an AMBT could have other beneficiaries besides the disabled or chronically ill beneficiary. The other beneficiaries did not have to be “eligible designated beneficiaries,” but they did have to be designated beneficiaries (i.e., individuals).

A charity does not qualify as a designated beneficiary, so naming a charity would have ended the ability to use the stretch for payments from the inherited IRA to the trust. Instead, the trust would have been required to use the remaining single life expectancy of the IRA owner or the five year rule, depending on when the IRA owner died.

SECURE 2.0 changes these rules for AMBTs. Under the new law, a qualified charity (under the regular IRS rules) will count as a designated beneficiary of an AMBT and allow a stretch payment from the inherited IRA to the trust using the special needs beneficiary’s life expectancy. This change is effective immediately.

Example: Stephan names a special needs AMBT for the benefit of his disabled son, Malik, as the beneficiary of his IRA. After Malik’s death, any remaining funds from the IRA are to be paid to a local charity. After Stephan’s death, distribution can now be paid from the inherited IRA to the AMBT over Malik’s life expectancy.

This change is good news for special needs beneficiaries with AMBTs. It is not uncommon for those setting up such trusts to have charitable intents. Now under SECURE 2.0, being charitable won’t have the unintended consequence of limiting favorable distribution options for vulnerable beneficiaries.

https://www.irahelp.com/slottreport/secure-20-modifies-rules-special-needs-trusts

Ready To Take

THE NEXT STEP?

 

For more information about any of our products and services, schedule a meeting today.

Or give us a call at (803) 242-1050

Investment advisory services offered through Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser. Nothing on this website constitutes investment, legal or tax advice, nor that any performance data or any recommendation that any particular security, portfolio of securities, transaction, investment or planning strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations, execution of required documentation, and receipt of required disclosures. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to https://adviserinfo.sec.gov and search by our firm name or by our CRD #175083.

 ADV Part 2A & Form CRS              Privacy Policy