What You Need to Know
- Advisors need to look into alternative solutions, but much confusion remains about the new rules, he says.
- Under the regs, IRAs are dead as a long-term planning vehicle, he said.
- He suggests Congress eliminate RMDs altogether.
One “big message” is clear from the IRS’ recently released proposed regulations on how to handle required minimum distributions under the Setting Every Community Up for Retirement Enhancement (Secure) Act of 2019, according to Ed Slott: “In my view, these regs are the final nail in the coffin for using IRAs for wealth transfer or estate planning.”
Advisors “need to look into alternative solutions to clients’ current plans because those plans won’t work anymore as they intended,” Slott, of Ed Slott & Co., told ThinkAdvisor on Tuesday in an email.
While Slott said that he views this “an opportunity for advisors, … they first must have enough knowledge to explain the problems to clients so they can understand why new planning options need to be considered now.”
The proposed IRS RMD regulations, which are effective now, as well as the new life expectancy tables for 2022 “are still not well known by advisors,” Slott continued. “And the advisors that are aware are still unsure of how the rules will work for beneficiaries.”
The new IRS rules “really muddied already existing RMD rule complications from the Secure Act,” Slott said.