The Retirement Enhancement and Savings Act Would Limit the Stretch Out of Inherited IRA Distributions
On September 21, the Senate Finance Committee unanimously approved an important retirement bill. The Retirement Enhancement and Savings Act (the “RESA”) would ease the rules for nondiscrimination for closed defined benefit plans, allow open multiple employer plans, increase the limits in saving in automatic enrollment arrangements, and promote options for lifetime income.
None of the above would affect estate planning. However, to pay for the revenue losses of the Act, it would also require beneficiaries of any IRA or other retirement account of over $450,000 to take all distributions from account or plan over the five year period after the death of the plan participant. This would apply to inherited individual retirement accounts (IRAs) and defined contribution (DC) plans.
The bill was not approved in the final flurry of legislation in Congress in December. However, it is anticipated the bill will be reintroduced in the Congress in the next session in 2017.
Kevin Staker is a member of the California state bar. His listing is found at:
He is an active attorney and may practice law in California. For more details see: http://members.calbar.ca.gov/fal/Member/Detail/101400
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By Kevin Staker
Estate Tax May Be Repealed, Believe It or Not
by Kevin Staker
Since the estate tax exemption was raised to $5,000,000 in 2010 I had told clients I thought the estate tax would never be repealed. I believed that there would never be 60 Republican senators, the number needed to overcome a filibuster in the Senate by the Democrats. It appears I was wrong.
Turns out only 51 Republican senators are needed if tax reform is enacted under “budget reconciliation”. This is how the Democrats passed Obamacare, the Affordable Health Care Act, by a mere majority in 2010.
The Republicans have 52 votes in the Senate. The Republican majority House of Representatives favors estate tax repeal. Their plan, “A Better Way”, states they want to “repeal the Death Tax so that the loss of a family member will no longer be a taxable event. See https://abetterway.speaker.gov/_assets/pdf/ABetterWay-Tax-Snapshot.pdf
President (presently elect) Trump favors estate tax repeal:
The Trump Plan will repeal the death tax, but capital gains held until death and valued over $10 million will be subject to tax to exempt small businesses and family farms. To prevent abuse, contributions of appreciated assets into a private charity established by the decedent or the decedent’s relatives will be disallowed. (See https://www.donaldjtrump.com/policies/tax-plan/).
Hence, I, Kevin Staker, must admit I was wrong. The federal estate tax will now be likely repealed.
By Kevin Staker
The mediation website of Kevin Staker is now online at http://kevin-staker-mediation.com/ . Kevin Staker is a probate and trust attorney in Ventura County, California. He has been certified by the California Board of Legal Specialization as a specialist in both Taxation as well as Estate Planning, Probate, and Trust Law. Kevin Staker has been practicing law for over 35 years.
He will conduct probate mediations and trust mediations.
Kevin Staker can be reached at 805-482-2282.
Federal Estate Tax Exemption for 2017
The Internal Revenue Service has announced in IRS Revenue Procedure 2016-55 that the federal estate tax exemption for 2017 will be $5,490,000. The IRS also announced the gift tax exclusion will remain at $14,000.
The IRS never makes these things easy. It would have been nice if the exemption had gone to $5,500,000 to make the math easier for us. But alas the IRS was bound to the strict inflation adjusting formula of the Internal Revenue Code. This formula adjusts for inflation applied to the $5,000,000 exemption since 2010.
The Rev Proc is found at https://www.irs.gov/pub/irs-drop/rp-16-55.pdf. This technically is not official because it has not yet been published in a formal Internal Revenue Bulletin. The full IRS announcement released on October 25, 2016, is found at https://www.irs.gov/uac/newsroom/in-2017-some-tax-benefits-increase-slightly-due-to-inflation-adjustments-others-are-unchanged. This announcement lists the slight increase in a number of inflation adjusted figures under the federal tax law.
By Kevin Staker