How the SECURE Act Affects Your Retirement Plan

Couple hugging

The recently passed SECURE Act is making a big impact on IRAs inherited by non-spousal beneficiaries.

Is there a solution to the newly enforced distribution limits?

Two women laughing

Before the SECURE Act passed in December 2019, IRA beneficiaries could choose to stretch their distributions (and taxes) throughout their life expectancy. (Exceptions include recipients with disabilities, minors and individuals who are within 10 years of the age of the IRA owner.)Under the SECURE Act, beneficiaries will be forced to withdraw assets within 10 years after the death of the IRA account holder, receiving larger amounts distributed over a shorter period and paying higher taxes on their inheritance.

There is a Better Way

Use your IRA to fund a testamentary charitable remainder unitrust (TCRUT) at the Oklahoma City Community Foundation.

How it Works:

Family members interacting

The IRA is transferred at death of the surviving spouse to establish a TCRUT. Since the unitrust is tax exempt, no income tax is paid when the IRA is distributed to the trust. The full IRA balance is invested and grows with time as did the IRA. A minimum 5% or maximum 50% taxable distribution of the trust is paid to children for life or for a term up to 20 years. At the end of the term of years, the remaining balance of the trust is distributed to the charity of the original IRA owner’s designation.

Contact Joe Carter at 405/606-2914 for questions and more information!