Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Tuesday, June 1, 2021

New IRS Guidance On IRA Inheritances Clouds Retirement, Tax Planning

IRSEstate and retirement planning continues to be an area confusion due to the "unclear IRS guidance regarding how long beneficiaries are required to take payouts from inherited IRAs."

The IRS's new guidance, Publication 590-B, "which seems to indicate that certain beneficiaries will no longer have 10 years to take distributions from inherited IRAs and instead will be required to take payouts the first year of their inheritance" is one essential cause for the confusion. 

The unclear language in Publication 590-B has left many wondering where they stand in regard to their IRA inheritance. Further, those engaging in estate planning are unsure of the implications of passing on an IRA to a beneficiary. 

Advisors and CPAs are advising those "to wait for the proposed regulations under the SECURE Act to come out and indicate whether the apparent nine-year timing issue. . . is a real issue or not," according to Seymour Goldberg. 

The SECURE Act of 2019 added some clarity regarding payouts, but due to the potential issues regarding the contradiction posed by Publication 590-B, there may be significant implications due to the remaining confusion. 

See Tracey Longo, New IRS Guidance On IRA Inheritances Clouds Retirement, Tax Planning, Financial Advisor, May 28, 2021.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

https://lawprofessors.typepad.com/trusts_estates_prof/2021/06/new-irs-guidance-on-ira-inheritances-clouds-retirement-tax-planning.html

Estate Administration, Estate Planning - Generally, New Legislation | Permalink

Comments

The IRS has released an updated version of this publication that corrects the errors in the earlier version of this publication.

Posted by: Bruce Tannahill | Jun 2, 2021 6:48:09 AM

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