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IRA Distributions and RMDs: Minimizing Taxes and Meeting SECURE 2.0 Requirements

Avoiding Excise Tax and Early Withdrawal Penalties, Charitable Contribution Strategies, Bracket Topping

CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Monday, January 29, 2024

Recorded event now available

or call 1-800-926-7926

This webinar will review changes made to retirement account distributions and required minimum distributions (RMDs) by the SECURE Act. Our panel of notable financial planning experts will offer strategies to minimize tax on distributions from individual retirement plans, avoid penalties on early withdrawals, and potentially eliminate the excise tax on missed RMDs.

Description

Significant changes were made by SECURE 2.0 to individual retirement accounts (IRAs) and RMDs. The beginning date for required withdrawals was raised to age 73 for individuals with birthdates on Dec. 31, 1959, or before, and age 75 for those with birthdates after this date. The SECURE Act requires non-spousal beneficiaries to withdraw IRA assets inherited after Dec. 31, 2019, within 10 years of the IRA owner's death. Only "eligible designated beneficiaries" are eligible to withdraw IRAs over their life expectancy.

As always, failure to take an RMD carries stiff penalties: 50 percent for missed RMDs in years 2022 and prior. SECURE 2.0 reduces this excise tax to 25 percent beginning in 2023 and even lower, to 10 percent, if timely corrected. A taxpayer must file Form 5329 to begin the tolling of the statute on these penalties. Taxpayers who neglect to take their RMDs would not be aware of the obligation to file Form 5329, consequently allowing the IRS to assess this excise tax indefinitely. The IRS has offered some relief. Recently released Notice 2022-53 states the IRS will not impose the excise tax on beneficiaries subject to the new 10-year payout and who failed to take required distributions in 2021 and 2022. Understanding when distributions must be made from IRAs is critical for tax advisers and taxpayers participating in these plans.

Listen as our panel of tax strategists discusses methods to reduce tax in light of recent changes and avoid penalties and excise tax on these distributions.

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Outline

  1. IRAs and RMDs: an introduction
  2. SECURE 2.0
  3. IRAs
    1. New rules for inherited IRAs
    2. Penalty-free withdrawals
    3. Comparison to other qualified plans
  4. RMDs
    1. Beginning dates
    2. How beneficiary RMDs are determined
    3. Resolving missed RMDs
      1. IRS Notice 2022-53
      2. Requesting a waiver, Form 5329
  5. Minimizing taxes paid on distributions
    1. Bracket topping
    2. Roth IRAs
    3. Trusts
    4. Charitable contributions
    5. Other strategies

Benefits

The panel will review these and other critical issues:

  • New IRA distribution rules for beneficiaries following the SECURE Act
  • Using charitable contributions to minimize tax on retirement account distributions
  • Distribution rules for IRAs vs. other qualified plans
  • Rectifying missed RMDs

Faculty

Breen, Joseph
Joseph Breen, CPA, MBA
Tax Supervisor
Withum Smith+Brown

Mr. Breen is a Tax Supervisor working in both the Construction Industry Team and Private Client...  |  Read More

Justin Lynch
Justin Lynch
Senior Manager - Tax Services
Withum Smith + Brown

Mr. Lynch has 20 years of experience advising high net worth domestic and international families on a wide range of...  |  Read More

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